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NBS: Economic development prognoses have not changed

Neither the current nor the expected development of Slovakia's economy have diverged significantly from the central bank's prognoses, according to a statement by Viliam Ostrožlík, vice-governor of the National Bank of Slovakia (NBS), on July 29.

Neither the current nor the expected development of Slovakia's economy have diverged significantly from the central bank's prognoses, according to a statement by Viliam Ostrožlík, vice-governor of the National Bank of Slovakia (NBS), on July 29.

The central bank decided not to change interest rates despite admitting that inflation in June was a little higher than expected and that prices are expected to grow faster than original prognoses, the SITA newswire wrote.

"Having analysed the current development, the cyclical movement of the economy was not re-evaluated more significantly in the July prediction, also given the fact that price growth in June in Slovakia was comparable to inflation development in the eurozone, where price growth was also affected chiefly by cost factors, the NBS Bank Board decided - in an environment of the restrictive effect of the exchange rate and the upcoming eurozone entry - not to change interest rates," he said.

According to Ostrožlík, June growth of consumer prices was moderately higher than the NBS had expected. The reason behind this was higher energy and food prices. In energy prices, the price of motor fuels dominated, while their rise is also beginning to be reflected gradually in the price of some services. Rapid appreciation of the Slovak crown in the first half of this year has not been reflected in inflation so far, the central bank said.

Final consumption of households is contributing strongly to the economy's profitability. This has also been reflected in trade balance development. The Bank Board also discussed the updated prediction of economic development until 2010. The board stated that there were several risks to macroeconomic development, especially the price of energy commodities and foodstuffs.

The NBS again left key interest rates in Slovakia unchanged in July. Following the meeting, the two-week sterilisation repo-rate remains at 4.25 percent p.a. Slovakia's central bank thus met analysts' expectations that it would match interest rates in the eurozone.

The NBS last decided to change interest rates in March and April 2007, cutting them by 25 basis points in each month. SITA

Compiled by Zuzana Vilikovská from press reports
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