Bond.az -- Iceland's central bank raised its policy interest rate by 25 basis points to 7.75% from 7.50% on Wednesday.
The central bank said inflation expectations have increased, with short-term expectations showing particular growth.
Rising oil and commodity prices, combined with ongoing domestic inflationary pressures, have led to a deterioration in the inflation outlook, the bank stated.
The central bank now expects weaker GDP growth and higher unemployment compared to its February projections.
