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Central Bank cuts key interest rates due to economic development

Cuts to key interest rates were made possible by Slovakia’s favourable economic developments.
The Bank Board of the National Bank of Slovakia (NBS) explained in its commentary on the decision to lower interest rates that economic growth does not create pressure on demand inflation. The NBS came to the conclusion that no further pro-growth risks were identified in inflation since economic development was in compliance with NBS expectations, said NBS Vice-Governor Martin Barto.

Moreover, the approval of lower interest rates did not change general monetary conditions, and thus did not deny the importance of a strong crown in the decision-making process of setting rates.

"General monetary conditions in Slovakia are determined by these two factors, so the Bank Board did not affect them through their action," Barto said.

He added that the published structure of Q4 2006 GDP was in accordance with NBS expectations when the main momentum of economic growth was net export.

Labour productivity still grew more quickly than the wages. Inflation, measured by the harmonized index of consumer prices, slowed down from the previous month in February but was in compliance with NBS expectations as well.

Compiled by Zuzana Vilikovská from press reports
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