Decisions adopted by the Governing Board on the occasion of its 271st regular meeting on 10 June 2003

At its meeting on 10 June 2003, the Governing Board of the Bank of Slovenia dealt with the following matters and took the following decisions:
The Board discussed the current monetary situation, paying particular attention to the consequences of recent reduction of the interest rates by the ECB. In analysing the needed adjustments, potential combination of different monetary policy instruments was taken into account. In making the choice, the need of keeping the real interest rates at an appropriate was observed, along with the additional decrease in the differential between domestic and foreign interest rates. Estimating that inflationary expectations are decreasing, the Board chose a combination of lowering the interest rates on both assets and liabilities side. With the exception of the interest rate for the overnight deposit, the interest rates on other instruments were reduced by 75 or 50 basis points, as follows:

• lombard loan: from 9.00% to 8.25%
• repurchase facility for bills denominated in foreign currency: from 8.00% to 7.25%
• 60-day tolar bills: from 7.25% to 6.50%
• 270-day tolar bills: from 8.25% to 7.50%
• temporary purchase of foreign exchange: from 4.00% to 3.50%

Following the above reduction in interest rates, the differential between domestic and foreign interest rates was reduced by 25 basis points. The Governing Board also decided to reduce the price for temporary purchase of foreign exchange from 4.00% to 3.50% which results in the new level of the Bank of Slovenia refinancing rate at 5.50%.

The new interest rates will take effect from 11 June 2003, with the exception of the interest rate for 270-day tolar bills which will be effective from 13 June 2003.