The central intervention rate was left unchanged at 3.25% during today's Monetary Policy Advisory Council meeting.
The following press release was issued by the Central Bank of Malta:
"The Governor considered that at its current level, the central intervention rate continued to provide adequate support to the Maltese lira in ERM II. Financial market conditions were stable in October. The upward trend in the Central Bank of Malta’s external reserves persisted, with the increase reflecting a combination of capital movements and seasonal flows. At the same time, interest rate differentials narrowed slightly, largely reflecting higher yields on the euro, but remained relatively wide.
While reserve movements suggested an improvement in the economy’s external position, the available information continued to point to a generally weak performance of the export sector. Reducing the imbalance on the current account of the balance of payments, therefore, remains a key policy challenge, particularly in the light of the continuing high level of oil prices. In this context, the latest fiscal data, which point to a further narrowing of the budget deficit, are welcome. Going ahead, the Governor underlined that fiscal discipline needs to be sustained and structural reforms effectively implemented to boost competitiveness. It is also important that such efforts are not compromised by secondary effects of the increase in domestic energy costs on wages and prices in general.
The Monetary Policy Advisory Council is due to meet on 29 November 2005".