Decisions adopted by the Governing Board on the occasion of its 319th regular meeting on 6 October 2005

1. At its meeting on 6 October 2005, the Governing Board of the Bank of Slovenia decided to leave the key interest rates of the Bank of Slovenia unchanged. The interest rate on the 60-day tolar bills remains at 4.0% and the interest rate on the 7-day foreign exchange swap remains at 1.5%.
   On the basis of the regular economic analysis, the Governing Board assesses that the monetary policy stance is appropriate. The current level of interest rates is consistent with maintaining the stability of the nominal tolar exchange rate against the euro. At the same time, current price movements and medium-term inflation expectations remain in line with the medium-term price stability objective. The Governing Board expects that the inflation target related to the adoption of the euro will be met in time. Risks to meeting the price stability criterion relate mainly to the possibility of further increases in the prices of heating oil and fuels for transport, as the changes in these prices have a greater impact on inflation in Slovenia than on inflation in other EU Member States.
   Developments in the global economy have lately been affected by greater uncertainties arising because of the hurricanes at the coast of the Gulf of Mexico espite having effects on economic activity in the short run, the consequences of Hurricanes Katrina and Rita are currently assumed not to present a threat to the long-run growth of the global economy. Economic policymakers around the world pay considerable attention to high crude oil prices, which continue to be the most important risk to global economic activity.
   The Slovenian economy grew above the trend growth rate in the second quarter of this year. This may in part be attributed to temporary impacts in foreign trade movements. Currently available indicators suggest that the economic activity has been slowing down recently. While household consumption continues to be strong for the moment, consumer confidence has been gradually eroding since April. Greater consumers´ pessimism reflects tighter labour market conditions and increases in the prices of oil derivatives.
   As in the euro area, the September price movements in Slovenia were also mainly influenced by the price growth of oil derivatives. Year-to-year inflation, measured by the Harmonised Consumer Price Index, rose to 2.5% in the euro area and to 3.2% in Slovenia. Although prices of oil derivatives in all EU Member States depend on price developments on international stock exchanges, their actual impact on inflation varies across individual countries.
   The asymmetric impact of price movements in oil derivatives on indices of consumer prices is a consequence of different factors, namely the use of different weights of oil derivatives in calculating indices, various shares of the purchase price in the retail price of oil derivatives, modifications of tax policies and changes in exchange rates. The direct impact of changes in the prices of oil derivatives on inflation in Slovenia is above average, since Slovenia disposes of the second highest share of oil derivatives in the Harmonised Consumer Price Index within the EU, and the shares of the purchase price in the retail price of oil derivatives are relatively high because of low levels of excise duties. The contribution of oil derivatives to year-to-year inflation in August thus amounted to 0.6 percentage points in the euro area and to 1.4 percentage points in Slovenia. Price increases in oil derivatives contributed 1.7 percentage points to a 3.2 per cent year-to-year inflation rate in September.
   
2. The Governing Board of the Bank of Slovenia gave consent to the conclusion of a bilateral agreement between the Bank of Slovenia and the Italian Deposit Guarantee Scheme concerning bank deposit guarantees. The Agreement enables Slovene banks to additionally include their branches in Italy in the Italian Deposit Guarantee Scheme.