Invest In Iceland - Interest Rates Raised To 18 Pct

Iceland's central bank unexpectedly raised the benchmark interest rate to 18 percent today after the island reached a loan agreement with the International Monetary Fund.

Policy makers raised the key rate by 6 percentage points, the Reykjavik-based bank said in a statement today, taking the rate to the highest since the bank began targeting inflation in 2001.

The IMF deal is due to be presented to the fund's executive board later this week. One of the conditions attached to the loan was that policy makers raise the key rate to 18 percent, the country's central bank said.