Monetary policy must stay tight

"Loosening the current monetary policy of the National Bank of Slovakia (Národná banka Slovenska, NBS) could cause a loss of balance in the Slovak economy," said the Director of the NBS Institute of Financial and Monetary Studies, Jozef Makých, at a conference named Monetary Policy in Transforming Economies which took place in Banska Bystrica. Devaluation and a possible loosening of the monetary policy of the NBS could, according to Makých, cause an increase in inflation as well as constant pressure on interest rates and the course of the Slovak crown. The argument that devaluation would help to solve the increasing deficits of the trade balance and the balance of payments is not, according to Makých, entirely correct because the increasing foreign deficit is mainly caused by the high demand for imports.