Thursday, the Central Bank of Iceland reduced its key policy rate by 250 basis points to 13%. In April, the central bank lowered the interest rate by 150 basis points to 15.5%.
Overnight lending rates was cut by 250 basis points to 17%, while other interest rates were lowered by 300 basis points.
This is the third cut since the crisis-hit country agreed to a US$5.1 billion financial aid with the International Monetary Fund.
The consumer price inflation eased sharply. The consumer price index or CPI rose 11.9% year-on-year in April, slowing from a 15.2% rise in the previous month.
The central bank is due to give details about the decision later today.
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