Official interest rates unchanged

The Central Bank left the central intervention rate unchanged at 3.75 per cent yesterday following the monthly meeting of its monetary policy advisory council.

The decision was taken by the Governor, Michael C. Bonello.

The rate was last adjusted in December when it was lowered by 25 basis points.

"The governor considered that leaving official interest rates at their existing level was appropriate in the current global climate of growing uncertainty, as manifested in declining consumer confidence and business sentiment worldwide" the bank said.

"Money market rates abroad fell, leading to an increased premium on the Maltese lira, which gave additional support to the exchange rate peg.

"With regard to developments in Malta, the council observed that the Central Bank's external reserves resumed growth in January and into February, suggesting an absence of downward pressures on the exchange rate peg.

The council also noted that the reduction in official interest rates in December had meanwhile been transmitted to retail bank lending and deposit rates."

The bank said that in line with its statutory objective to maintain price stability, the council welcomed the fact that inflation fell again in December and was expected to continue on a downward trend into the first half of 2003.