Decisions adopted by the Governing Board on 15 November 2006

1. At today’s meeting the Governing Board of the Bank of Slovenia left the bank’s key interest rates unchanged. The interest rate level is in line with the maintenance of price stability and the stability of the nominal euro/tolar exchange rate. 
   Inflation trends remain favourable. Year-on-year inflation fell in October from 2.5% to 1.6%. As in September, the main factor in the fall in inflation was the decline in prices of refined petroleum products. The price rises in October were to a great extent seasonal, with clothing and footwear recording increases in price. There was a slight fall in core inflation in October, while other price indicators such as producer prices and import prices remain settled. Year-on-year inflation is expected to settle at the forecast level in the coming months. 
   The figures currently available indicate that the high economic activity seen in the first half of the year slowed slightly in the third quarter. This is confirmed by trends in both industry and trade. The current rate of growth in the construction sector is slowing, although year-on-year growth rates remain high. Growth in housing loans is outstripping the overall growth in lending, which is stabilising at a high level. The current account deficit in the year to August deteriorated to 2.6% of estimated GDP, primarily as a result of adverse movements in transfers and factor income.
   
2. At today’s meeting the Governing Board was briefed on the performance of banks in the current year and the results of macro stress tests. The banking system’s total assets rose by 7.6% in real terms in the first nine months of the year, 5.6 percentage points less than in the same period last year. In nominal terms it reached SIT 7,767 billion in September, equivalent to 117% of GDP. The average growth in lending to non-banking sectors in the first nine months of the year was almost 4 percentage points higher than the average in 2005, although growth in lending to non-banking sectors has stalled at between 26% and 27% and is not rising further. The increase in bank lending activity is a reflection of the higher economic activity, borrowers’ awareness that the period of relatively low interest rates is coming to a close, and the increase in competition. The last of these is seen primarily in the new products available, in particular those aimed at households. 
   The aforementioned macro stress tests are for assessing the banking system’s sensitivity to shocks in selected risk factors. The results showed that banks are exposed above all to a rise in interest rates and decline in the interest margin because of their borrowing at foreign banks. None of the simulated shocks threatens the solvency of the banking system. 
   
3. The Governing Board was also briefed on the integral inter-institutional testing of IT support for the changeover to the euro. The reports submitted by various institutions show that the tests conducted in October of the flexibility of the IT infrastructure and the functioning of other equipment supporting a smooth changeover to the euro in various users’ transactions with systemic institutions indicated a satisfactory level of readiness.
   
4. The Governing Board issued Dušan Grlica with an authorisation to hold office as a member of the management board of Hranilnica in posojilnica Vipava d.d.