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NBS: Macroeconomic development favourable, rates unchaged

It is possible to regard Slovakia's current and expected macroeconomic development as favourable, central bank (NBS) governor Ivan Šramko said following the NBS bank board session on January 29. Due to its current mid-term prediction, the NBS on Tuesday decided to retain the key interest rates without change. Šramko defended the decision by saying mid-term prediction wasn't much different from the previous one when it came to the outlook on demand pressures, and that the rise of inflation was due to externalities which currency policy cannot influence.

It is possible to regard Slovakia's current and expected macroeconomic development as favourable, central bank (NBS) governor Ivan Šramko said following the NBS bank board session on January 29. Due to its current mid-term prediction, the NBS on Tuesday decided to retain the key interest rates without change. Šramko defended the decision by saying mid-term prediction wasn't much different from the previous one when it came to the outlook on demand pressures, and that the rise of inflation was due to externalities which currency policy cannot influence.

The NBS also assumes that the moderate growth in real incomes will continue. However, according to Šramko continued price rises in crude oil and foodstuffs represent a risk for the country's future macroeconomic development. The increase of food prices also continued in December, Šramko said, while pointing out that the growth was not as dynamic as in previous months. The development of the prices of foodstuffs in Slovakia is similar to those in the surrounding countries and throughout the Euro-zone.

Turning to the exchange rate, Šramko said it was volatile in December, and this month the Slovak koruna was experiencing the same developments as other currencies in the region. The NBS bank board was unanimous on not changing its key lending rates, which have not changed since April 2007. The interest rate for two-week repo tenders with commercial banks remains at 4.25 percent, for the individual sterilization trades at 2.25 percent, and for one-day re-financing trades at 5.75 percent. TASR

Compiled by Zuzana Vilikovská from press reports

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