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UPDATE 1-Iceland's keeps rates steady despite worsening outlook

(Adds details, infections numbers)

COPENHAGEN, Oct 7 (Reuters) - Iceland’s central bank on Wednesday left its key interest rate unchanged at 1.00% despite a worsened economic outlook as demand was dented by an increase in coronavirus cases.

“Because of increased spread of the coronavirus in the recent past, the economic outlook has deteriorated relative to the August forecast,” the central bank said in a statement.

Iceland has seen COVID-19 infections rise since early September, prompting the government to reinstate some restrictions to curb the spread.

Some 3,081 confirmed COVID-19 infections have been registered so far in the Atlantic nation of around 360,000 people, out of which 10 have died.

Inflation rose to 3.2% in the third quarter, slightly above the central bank’s August forecast, it said. (Reporting by Nikolaj Skydsgaard and Jacob Gronholt-Pedersen; Editing by Alison Williams and Toby Chopra)