Slovakian Interest rates unchanged.

The central bank of Slovakia has decided to keep the key interest rate unchanged for a year at 4.25 percent.

Their reasoning being that inflation will reduce through to 2009, and the chances that the country will uptake the euro currency by 2009, will be high as they expect to become the 16th member of the euro zone.

The board decided to keep interest rates static as although inflation has driven costs higher, the global impact has been uniform especially amongst neighbouring countries.

The bank’s monetary-policy department did indicate that both food and fuel prices are the key deciders in influencing inflationary development.

The first forecast for 2008 was 2.8 percent although with the current price trends the forecast for price growth in 2009 to 3.1 percent.

The central banks decision has been made before the European Union’s assessment of Slovakia’s application to adopt the euro.

The EU has forecast that Slovakia’s price growth will decelerate after peaking in the last quarter.

Thus the bank must ensure that borrowing costs are within the 4 percent benchmark rate in the euro region.

The European Commission draft report reveals that the country must fulfil obligations that include governing its inflation rate, deficit, long-term interest rates and exchange rate.

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