No change to central intervention rate

The Central Bank of Malta yesterday left the central intervention rate unchanged at three per cent.

The decision was taken at the end of the Monetary Policy Advisory Council meeting held in the morning.

Central Bank governor Michael Bonello noted that following the transmission of the September reduction in the central intervention rate to the financial markets, the premium in favour of the Maltese lira narrowed accordingly in October.

Meanwhile, the bank's external reserves remained stable, implying that the current interest rate level provides adequate support to the exchange rate peg.

This monetary policy stance also remained appropriate in the light of the latest economic indicators, which reflect an economy growing at below its potential rate, the bank said.

This notwithstanding, the sizeable current account deficit remains a source of concern for the bank. To the extent that the expected fiscal consolidation contributes to a reduction in the external imbalance, and therefore reinforces the currency peg; this would facilitate the maintenance of the bank's current policy stance.

The Monetary Policy Advisory Council is due to meet again on November 28.