BAGHDAD: Iraq's central bank has decided to slash interest rates by one percentage point to 14 per cent starting January 4.

The move comes in order to boost growth dented by sliding oil prices as inflation falls, the bank said.

"Owing to the fall of consumer price index in November and seeking to boost gross domestic product (GDP) ... the Iraqi central bank decided to cut rates to 14pc from 15pc, starting from January 4," a bank statement said.

Iraq's core inflation fell to an annual 12.7pc rate last month, from 13.6pc in October.

The IMF said last week that economic activity had picked up in Iraq as violence falls, but that the steep fall in oil prices had worsened its fiscal outlook. It did not give figures for GDP growth.

A previous IMF forecast in September had predicted growth of 9pc next year, but with oil sliding as the global economy moves into recession, that now seems unlikely.

Crude, which supplies some 95pc of Iraqi government revenues, traded at $36 a barrel yesterday, down $110 a barrel from its mid-July peak.

Last month, Iraq's central bank cut interest rates by one point to help shield Iraq's economy from the global financial crisis.