Iceland Raises Rates to Shield Krona From Market Turbulence

Iceland’s central bank raised its interest rates for a second time in three months as policy makers try to shield the krona from market turbulence fueled by Europe’s deepening debt crisis.

The seven-day collateral lending rate was raised to 4.75 percent from 4.5 percent, Reykjavik-based Sedlabanki said today, after leaving rates unchanged last month. Policy makers in August raised rates for the first time since the failure of the country’s banks in 2008. The three economists surveyed by Bloomberg had expected no change.