The decision by the Slovak central bank (NBS) on May 27 to keep key interest rates unchanged was expected, analysts have told the TASR newswire. The analysts predict that the NBS won’t be in any hurry to align its interest rates with those of the European Central Bank (ECB). Slovakia's repo rate is 0.25 points higher than the eurozone's, and will have to fall in line by the time that Slovakia adopts the common European currency in January 2009.
“We don't expect an alignment of the NBS rates with those in the eurozone until September or November,” TASR was told by ING Bank analyst Eduard Hagara. According to VÚB analyst Martin Lenko, recent comments made by NBS governor Ivan Šramko indicate that the central bank will wait for rate movements in the eurozone. If these are lowered in September or October, the NBS will follow suit. "However, if the ECB keeps the rates unchanged for the rest of the year, we assume that the alignment will take place only on January 1, 2009," added Lenko.
The ECB won't change the key rates again this year, thinks Poštová Banka analyst Eva Sarazová. She agrees that NBS has no reason to hurry in lowering its rates, as the current rate is calming inflationary pressures. The NBS has kept key interest rates unchanged for more than a year now, with the last changes made in March and April 2007. Its decision on Tuesday leaves the two-week repo rate at 4.25 percent, while overnight rates stand at 5.75 percent for refinancing operations and at 2.25 for draining excess market liquidity. TASR
Compiled by Zuzana Vilikovská from press reports
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