Iceland's central bank on Thursday cut its key lending rate a full point to 10 percent.
The seven-day collateral lending rate had peaked at 18 percent in October last year as Iceland's banking system collapsed under the strain of a global credit crisis.
Sedlabanki, the central bank, also cut its overnight lending rate by 1.5 percentage points to 11.5 percent. The deposit rate on current accounts was trimmed by a half a point to 8.5 percent.
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