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Analysts expect central bank to raise interest rates

THE NATIONAL Bank of Slovakia (NBS) will likely increase its basic interest rate tomorrow by 25 basis points to 3.25 percent, local analysts agree.

The increase will affect consumer and mortgage loans, as well as corporate credit.

However, the rate hike will not have an equal impact on bank sector interest rates because banks in Slovakia have been expecting the increase for several months and have already partially factored it into their rates.

"Market rates have already increased slightly since the beginning of this year," Pavol Ondriska, an analyst with the ING DSS pension management company, told the SME daily.

According to Poštová banka analyst Miroslav Šmál, interest rates on loans will increase by 0.2 percent after the expected NBS decision.

Analysts expect the NBS to raise the base rate again in the second quarter of this year in order to rein in the Slovak economy, which grew at 7.5 percent year-on-year in the last quarter of 2005.

Compiled by Martina Jurinová from press reports
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