The decision in the board was unanimous, writes Sedlabanki in a press release.
The interest rate cut comes as inflation in Iceland has been measured at 4.2 percent in April and forecasts from the central bank indicate that it is expected to remain around 4 percent for the rest of the year before falling towards the target level of 2.5 percent.
"The uncertainty surrounding inflation prospects is, however, still high, not least due to the recent development in the international economy", writes Sedlabanki.
