The Central Bank of Malta today left the central intervention rate unchanged at 3.25%. The decision was taken by the Governor at the end of the Monetary Policy Advisory Council meeting held this morning.
The Governor pointed out that the Bank’s external reserves increased in July and in August to date. These gains partly reflected seasonal factors, but were also a direct response to Malta’s entry into ERM II in May. The premium on the Maltese lira remained unchanged, reflecting stability in domestic and foreign market yields. Against this background, the Governor judged that the central intervention rate was at an appropriate level.
On the domestic economic front, international trade statistics for June indicated that the decline in exports was moderating while import growth was slowing down, despite increased purchases of industrial supplies, which had fallen in each of the previous four months. In addition, budgetary data pointed to a narrowing of the fiscal deficit during the first half of the year. At the same time, labour market conditions were stable, while price pressures eased, with inflation falling in July. While these developments are positive, any monetary policy response would depend on clear evidence that they were likely to be sustained.
The Monetary Policy Advisory Council is due to meet on 29 September 2005.