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Central bank keeps key rates on hold

FOLLOWING market expectations, the National Bank of Slovakia (NBS) has left its key interest rates unchanged.

The NBS bank board made the decision on July 31 after considering its updated medium-term forecast.

The decision left the two-week repo rate at 4.25 percent, while the overnight rate for refinancing operations stays at 5.75 percent, and the overnight rate for draining excess market liquidity holds at 2.25 percent.

The rates did not change for the third month in a row, the TASR newswire wrote.

NBS vice-governor Martin Barto said the bank expects to meet its inflation target for this year and next. Year-on-year inflation in June remained flat on the month, "largely as a result of the favourable development of food prices," he said.

The national economy does not face overheating as a result of the central bank's strict monetary policy, he said. The bank retained its GDP estimate for 2007 at 8.9 percent but slightly revised the GDP figure for 2008, estimating a slight increase of 0.1 percentage points to 7.5 percent.

The foreign trade deficit in May was markedly lower than a year earlier, but Slovakia's trade balance has been adversely affected since the start of this year by lower-than-expected exports and developments in crude oil prices.

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