Reykjavik - Iceland's central bank Thursday kept its key interest rate at 12 per cent.

The Monetary Policy Committee said the Icelandic krona has remained stable but further rate cuts hinge on a stronger krona.

The central bank Sedlabanki's most recent cut was in June.

The North Atlantic country has been hit by the global credit crunch that saw its three major banks taken over by the state. Unemployment has also increased as a result of the crisis.

Interest rates at the end of October were hiked to 18 per cent, and Iceland in November secured a 2.1-billion- dollar loan from the International Monetary Fund.(dpa)