Page last updated at 09:23 GMT, Thursday, 19 March 2009

Iceland interest rates cut to 17%

A bank customer holds a handful of Icelandic crowns
The krona has stabilised since interest rates were raised last year

The central bank of crisis-hit Iceland has cut its interest rate to 17%.

The rate cut is the first since Iceland agreed a $10bn financial aid package with the International Monetary Fund.

The Sedlabanki cut rates by one percentage point from 18%, where they had remained since October on the recommendation of the IMF.

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

Iceland's economy is forecast to shrink by almost 10% this year.

The country's currency, the krona, has stabilised since the October meltdown.

The central bank raised rates by six percentage points in October to the record high of 18%.



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