Iceland's Central Bank Holds Key Rate

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Thursday, Iceland's central bank retained its key interest rate, which is the collateral loan rate, at 12%.

The Sedlabanki also maintained its interest rate on deposits at 9.5%, but reduced the overnight lending rate to 14.5% from 16%.

The central bank has also decided to begin auctioning off 28-day certificates of deposit. The auctions will take place each week, on Wednesdays, with the first auction taking place on September 30. In each auction, the amount sold will be ISK 15-25 billion, with bid rates ranging from a minimum of 9.5% to a maximum of 10%.

Only Icelandic commercial banks may participate in the primary auction and own the securities, which are eligible for use as collateral at the central bank. The maximum bid is 50% of the amount on offer.

Thursday, Iceland's central bank retained its key interest rate, which is the collateral loan rate, at 12%. The Sedlabanki also maintained its interest rate on deposits at 9.5%, but reduced the overnight lending rate to 14.5% from 16%. (Market News Provided by RTTNews)