Slovak Interest Rate Unchanged at 4.00%

The Slovak central bank (NBS) board meeting ended without any changes leaving the key policy rate at 4.00%. This was broadly expected, especially given the 50bp hike at the May monetary policy meeting.

Today’s decision probably suggests an NBS that is biding its time and waiting for more macro-data on the economy, especially inflation, before moving interest rates.

Even though the NBS kept interest rates unchanged at today’s meeting, we foresee more rate hikes further down the road due to building inflationary pressures in the Slovak economy – both demand side and supply side. Adding to the arguments for further rate hikes is the weakening of the Slovak koruna on the back of an unfavourable domestic political situation after the recent general elections, and global economic conditions. Therefore, we think the central bank might deliver another rate hike, perhaps even as early as July.

SOURCE: Danske Bank