Official interest rates lowered
for second month running
By David Lindsay
The Central Bank of Malta yesterday lowered the central intervention
rate by 25 basis points to 3.25 per cent, a reduction equal to last
month’s rate cut.
The decision was taken by Central Bank Governor Michael C Bonello at
the end of the Monetary Policy Advisory Council meeting held this morning.
Supporting the decision to lower official interest rates again were,
in particular, the favourable short-term outlook for inflation, the
high level of liquidity in the financial system and an economic growth
rate that was likely to remain below potential.
The Governor also cited that recent developments in relevant indicators
had rendered a further cut in the central intervention rate compatible
with the maintenance of the exchange rate peg. The Central Bank’s external
reserves expanded in May and remained stable going into June.
At the same time the international economic environment continued to
show signs of weakness, leading once again to downward revisions in
growth forecasts and to lower official and market interest rates abroad.
Consequently, and despite the 25 basis point reduction in the Bank’s
central intervention rate in May, the interest rate differential in
favour of the Maltese lira remained at a level that appeared high under
The Monetary Policy Advisory Council is due to meet again on 25 July.