Central Bank leaves rate at four per cent

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

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

A statement by the Central Bank said the Governor considered that developments since the previous meeting did not justify a change in the monetary policy stance.

"The downward trend in the Bank's external reserves continued in April, partly driven by the conversion of Maltese lira assets into euro and the payment of corporate dividends abroad. This occurred against a background of stability in both short-term and long-term differentials in favour of the Maltese lira as interest rates rose in Malta and in the euro area.

"The Governor pointed out, however, that given the evolving scenario of rising interest rates abroad and its implications for the relative attractiveness of domestic assets, a revision of the monetary policy stance may be required in the near term," the statement said.

In its analysis of recent economic developments, the Council observed additional signs of stabilisation in the economic situation, with inflation falling further, indications of a recovery in tourism and positive trends in the labour market.

The Council also noted the progress achieved in reducing the fiscal deficit in 2006, while stressing the need for further expenditure restraint.

The Monetary Policy Advisory Council is due to meet again on May 29.