30 Jan 2009

Interest rates unchanged in Iceland

11:25 am on 30 January 2009

The central bank of Iceland kept its key interest rate unchanged on Thursday at a record 18%.

Iceland's financial system collapsed in October under the weight of debt, leading to a currency crisis, rising unemployment and daily protests.

Rates were raised by six percentage points in October - on the recommendation of the IMF - and they have remained at that level since then.

The BBC reports the economy is forecast to shrink by almost 10% this year.

The currency, the krona, collapsed in the October meltdown, although it has now stabilised.

Unemployment - once close to zero - is rising.

Since October, the IMF has co-ordinated a $US10 billion financial aid package.

On Monday, the coalition government collapsed under the strain of the crisis, after widespread protests.