During today's Monetary Policy Advisory Council meeting, it was decided to keep the central intervention rate unchanged at 3%.
The Governor of the Central Bank of Malta considered that the current stance of monetary policy was appropriate in the prevailing circumstances. The Bank’s external reserves had stabilised going into February against a background of an unchanged interest rate premium on the Maltese lira that reflected marginal movements in market interest rates in Malta and abroad. Inflation rose in January, as the impact of the increase in indirect taxes began to be felt.
However, underlying price pressures were unlikely to build up in the context of an economy that is not expected to reach its potential growth
rate in the short term. Looking ahead, the Governor stressed the importance of fiscal consolidation and structural reform in supporting the exchange rate peg and in promoting sustainable economic growth.
The Monetary Policy Advisory Council is due to meet again on 26 March 2004.