No move in intervention rate

The Central Bank has left the central intervention rate unchanged at 4.25 per cent, a decision taken by Governor Michael Bonello at the end of the Monetary Policy Advisory Council meeting yesterday morning.

Mr Bonello considered that, at their current level, official interest rates were appropriate in the light of developments since the latest increase hike in the central intervention rate in May.

The latter had been transmitted to bank deposit and lending rates and had also contributed to a widening of interest rate differentials in favour of the Maltese lira.

He said that although the bank's external reserves fell again in June, this largely reflected the reversal of earlier, temporary inflows. Consequently, the underlying downward trend in the reserves slowed down, signalling the absence of undue pressures on the exchange rate.

Mr Bonello spoke of how in its analysis of recent economic developments, the council noted that the economy continued to expand at a steady pace in the first quarter this year.

"The composition of growth appeared to have become more balanced, shifting away from domestic demand and towards net exports.

"The deceleration in domestic demand was accompanied by moderate growth in labour costs, a slowdown in imports of consumer goods and by a further decline in inflation in May," Mr Bonello said.

The council is due to meet again on July 25.