Wednesday, June 8, 2011

Croatian National Bank Cuts Discount Rate 200bps to 7.00%

The Croatian National Bank decreased its discount rate by 200 basis points to 7.00% from 9.00% previously.  The Bank's main monetary policy rate, the fixed repo rate, was kept unchanged at 6.00%.  The Bank said of the move: "Given the downward trend in interest rates on the money market and on loans, we cut the discount rate to seven from nine percent. Even though the discount rate does not directly affect monetary developments, this should further influence easing of interest rates,".

Previously the Croatian National Bank last raised the discount rate by 450 basis points to 9.00% from 4.50% in December 2007.  The discount rate is used for determining penalty rates and the highest possible interest rates applicable in business contracts.  According to IMF data, Croatia saw economic growth of 0.13% in 2010, while annual consumer price inflation was 2.6% for the year.


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