Decisions adopted by the Governing Board on the occasion of its 333rd regular meeting on 8 June 2006
At today’s meeting the Governing Board of the Bank of Slovenia cut the interest rate on 60-day tolar bills by 0.25 percentage points to 3.25%. Today’s change, which comes into effect tomorrow, is in line with adjustment of the Bank of Slovenia's interest rates to those of the European Central Bank. With the simultaneous change of the ECB’s interest rates, the refinancing rate for banks on the basis of the Bank of Slovenia’s foreign exchange swap rate has risen from 3.25% to 3.50%. The spread to the other Bank of Slovenia's interest rates has been reduced by 0.25 percentage points.
The Governing Board also discussed monetary trends today. Year-on-year growth in consumer prices rose to 3.2% in May. This increase of 0.5 percentage points from the previous month was primarily the result of April’s rises in oil prices on world markets, which was reflected in the prices of refined petroleum products with a time lag caused by the price formation model. As expected, seasonal food prices temporarily fell less than they did last year, while the overall movement of other prices acted to reduce year-on-year inflation. Core inflation is moving in line with expectations at a relatively low level, with the year-on-year rate falling to 1.4% in May. With the exception of oil prices, the macroeconomic factors remain unchanged from the Bank of Slovenia’s May forecasts, and should the right economic policies be continued there is no medium-term threat to price stability.
Economic trends in Slovenia remain favourable. The indicators point to reasonably high economic activity in the first quarter, but the slowdown in industrial production in particular in the second quarter points to a slight slowdown in economic growth. The high level of activity in the construction sector and strong imports of capital goods in the first months of the year reflect the rapid growth in investment spending. With good demand from the main trading partners, exports of goods and services remained a further engine of economic growth in the early part of the year.
At today’s meeting the Governing Board agreed that cash operations at banks would need to be restricted on 1 and 2 January 2007 in order to ensure that there is adequate risk management and that there is no disruption to the supply of euro cash during the currency changeover. The Bank of Slovenia will reach an agreement on this with the banks. Bank of Slovenia counters will be open for cash changeover during this time.