Interest Rate Hike Is A Vote Of No Confidence
20. March 2026Interest Rate Hike Reflects Failure Of Policy
The Central Board of ASÍ expresses serious concern about the situation emerging in economic affairs, with rising unemployment and persistent inflation, and calls for action by the authorities.
In the stability agreements concluded in 2024, the labour movement acted responsibly during a period of high inflation and economic uncertainty. Four year moderate payhike long-term collective agreements were made to create predictability and promote lower inflation and interest rates. The agreements were based on the premise that the state and municipalities would, among other things, support families with children, restrain tariff increases, and undertake strong development of residential housing. Likewise, companies were expected to act responsibly and restrain price increases.
It is clear that many of the promises made at the signing of the collective agreements have not been fulfilled. It has not been possible to ensure housing security or to undertake sufficient development of residential housing for low-income groups, partly due to an insufficient supply of building land from municipalities. Tariffs by the state and municipalities have increased far beyond what is compatible with stable price levels, and price increases by public energy companies are now a growing factor in inflation. Furthermore, large companies in the consumer market have in no way held back in raising prices on essential goods.
The Central Bank of Iceland’s interest rate hike is a vote of no confidence in the country’s economic management. The rate increase places additional burdens on young people, low-income and indebted households, while large groups are completely sheltered. The Central Board of ASÍ calls on authorities and companies to act responsibly and take measures that ensure the collective agreements hold and that the goals of stable prices and lower interest rates are achieved.