• Arion forecast a tougher Icelandic economy, citing Middle East conflict risks, higher commodity prices, rising unemployment, tighter credit conditions.
• Inflation seen at 4.2% next year, driven by war-related energy effects, public fee increases, persistent domestic price pressures.
• Rate cuts pushed back to mid-year; policy rate projected to fall 1 percentage point next year, ending at 7%.
• Private consumption growth expected to weaken through winter into next year as high rates, cost pressures erode household confidence.
• Housing investment forecast to contract this year, fall further next year; real house prices seen declining until mid-2028.

Disclaimer: This news brief was created by Public Technologies (PUBT) using generative artificial intelligence. While PUBT strives to provide accurate and timely information, this AI-generated content is for informational purposes only and should not be interpreted as financial, investment, or legal advice. Arion banki hf. published the original content used to generate this news brief on September 30, 2026, and is solely responsible for the information contained therein.