Iceland Central Bank Chief Seeks Fee Reform Amid Borrowing Cost Fears

Iceland's central bank chief, Asgeir Jonsson, is urging the government to rein in cost pressure by limiting public sector entities from linking their fees to inflation. This move aims to avoid further increases in borrowing costs, which are already among the highest in western Europe.

The country's municipalities and state-owned companies have been using indexation to inflation, according to Jonsson. He emphasized that this practice has contributed to Iceland's high borrowing costs.

In an interview after a third quarter-point interest-rate hike this year, Jonsson stressed the need for restraint in linking fees to inflation.