Reykjavik  - Iceland's central bank on Tuesday said it would hike its key interest rate from 12 to 18 per cent, after cutting the rates in mid-October.

The central bank, or Sedlabanki, had cut the rates from 15.5 per cent to 12 per cent on October 15.

Cash-strapped Iceland on Friday said it had signed a deal with the International Monetary Fund (IMF) for a 2.1-billion-dollar emergency loan to help stabilize Iceland's economy.

The IMF board has yet to approve the agreement.

Iceland has been hit by the global credit crunch that has seen the collapse of its three largest commercial banks.

At a meeting of Nordic prime ministers in Finland on Monday, the North Atlantic nation's Prime Minister Geir Haarde said he hoped to get additional loans from the Nordic countries.

Swedish Prime Minister Fredrik Reinfeldt, current chairman of the Nordic Council organization, said the group had promised to review the needs and were to form a working group that would monitor Reykjavik's efforts to revive its economy. (dpa)