Iceland's central bank reduced its benchmark rate for the fourth time in 2019, saying the country's GDP growth could weaken faster than currently expected amid an uncertain global economic outlook.
Seðlabanki Íslands lowered the rate on seven-day term deposits by another 25 basis points to 3.25% from 3.50% in August.
The central bank said output growth eased in the first half but came in stronger than previously estimated, mostly due to a "more favorable" net trade contribution.
"Leading indicators imply that economic activity will continue to slow, although there are signs that the economy may be regaining a foothold," the central bank said in a statement.
Iceland's headline inflation was at 3.1% in the third quarter, slightly below the central bank's forecast in August. Headline inflation is projected to ease faster than previously expected, the bank added.
Inflation expectations have also declined since the last Monetary Policy Committee meeting in August, the central bank said.
