Reykjavik  - Iceland's central bank on Thursday said it would keep its key interest rate at 18 per cent, after raising the rates at the end of October.

The central bank, or Sedlabanki, raised interest rates from 12 to 18 per cent on October 28. In mid-October it had cut the rates from 15.5 per cent to 12 per cent.

The decision to raise interest rates was in line with the terms of a recent agreement with the International Monetary Fund (IMF) for a 2.1-billion-dollar emergency loan to help stabilize Iceland's economy.

The IMF deal is yet to be formally approved by the IMF board.

Iceland is seeking additional loans of some 4 billion dollars. (dpa)