NBS leaves key interest rates unchanged

THE BANK Board of the National Bank of Slovakia (NBS) decided to keep interest rates unchanged at its monthly session on August 30.

The two-week repayment tender limit rate therefore remains at 4.5 percent, the overnight refinancing rate at 6 percent, and the overnight sterilisation rate at 3 percent, the news wire TASR wrote.

The decision is due mainly to the positive development of the country's net inflation, NBS Governor Marían Jusko said.

"The net inflation indicator, without fuels, in which the possible impact of demand factors on price growth is most clearly reflected, has registered a positive development since the beginning of this year," Jusko told the press.

Global crude oil prices could have an impact on inflation dynamics in the next few months.

"Their further increase may show up in the ongoing growth of fuel prices, due to which the year-end headline inflation might exceed the upper level of the planned interval," the governor said.

The NBS reduced inter-bank rates in March, April, and June, each time by 50 basis points, in response to rapid firming of the crown.

Since peaking in July at 39.7 against the euro, the crown has eased to above 40.1 against the euro, helped by direct intervention from the central bank.

The continued easing trend was behind the decision not to alter the rates, according to Tatra Banka analyst Robert Prega.

"The market expectations came true. An exchange rate higher than 40 crowns against the euro is acceptable. For the rest of this year, the NBS is only likely to cut interest rates if the crown firms," he said.

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