Slovakia's central bank NBS bank board reduced key interest rates by 50 basis points. The two–week repo-tender rate now stands at 5 per cent, the one - day refinancing rate at 6.5 per cent and the one-day sterilization rate at 3.50 per cent.
The move follows a 50-basis point reduction at the end of March and is seen as a response to continued firming of the Slovak crown currency, which this week broke through its all-time high of 40 SKK/EUR.It had an immediate effect on the crown's exchange rate, which eased to 40.140 SKK/EUR before recovering some ground to stand at 40.09 SKK/EUR.
The NBS is probably trying to slow down firming of the crown. Inflation is still relatively high and the impact on prices of Slovakia's EU entry is not yet known.
Slovakia is one of ten countries due to join the European Union on May 1. During 2003 the NBS reduced the interbank interest rates twice, each time by 25 basis points.
