M2 slows, but NBS unlikely to ease policy

The Slovak central bank (NBS) is unlikely to ease its tight monetary policy in the first half of 1997 despite a consistent slow-down in growth of the key money supply aggregate (M2) analysts said on May 12. The NBS said the M2, its main yardstick for assessing monetary development, grew 12.8 percent year-on-year in March 1997, after a 13.9 percent increase in February. This compares with a 24.1 percent increase in March 1996. But analysts said that new developments preclude the central bank from easing its tight monetary policy in the near-term. "There are some new factors that should be taken into account regarding M2 and monetary policy such as the new import deposit measure," said Sylvia Majlingová, liquidity department director at Československá Obchodná Banka (ČSOB). The NBS's full year target for M2 growth is 10.7 percent.