At its meeting today the CNB Council decided to reduce CNB interest rates. The interest rate on Lombard loans was lowered from 5 to 2.5 percent annually and the discount rate from 7 to 3 percent annually. The interest rate on short-term liquidity loans was cut from 5.5 to 3.5 percent for loans used up to three months and from 6 to 4 percent for loans used more than three months and the remuneration rate on the insufficiently allocated or maintained amount of reserve requirements was reduced from 12 to 8 percent. With this move, the CNB, while continuing to pursue a policy of maintaining comfortable liquidity in the banking system and exchange rate stability, intends to contain upward pressures on money market interest rates and downward pressures on the exchange rate, expected due to an increase in demand for kuna liquidity caused by the conversion of Swiss franc loans pursuant to the recently adopted Act on Amendments to the Consumer Credit Act. The same reason applies to the reduction of the discount rate which, while not having a significant impact on domestic monetary developments and no longer being used for the calculation of the statutory default interest rate, indicates an overall reduction in market interest rates.

In the period from early January to mid-October 2015, the average interest rate on kuna overnight interbank loans was 0.47%. The banks’ overnight lending rate averaged 0.5% and the deposit rate stood at 0.34%.

Also at today’s meeting, the CNB Council examined the latest economic and monetary indicators, the central bank financial statements for the first half of 2015 and the report on the banking system condition in the second quarter of the year. The Council also adopted a revised monetary projection for the period from 2015 to 2017 and a plan for the issue of commemorative coins and numismatic sets in 2016.

The CNB Council adopted several other decisions within its competence: Primorska banka d.d. Rijeka was granted approval to issue electronic money (MasterCard Prepaid Cards), Karlovačka banka d.d. Karlovac was given approval to acquire Haustus gradnja d.o.o. Karlovac and Baldekin d.o.o. Karlovac. The Council also accepted the proposal of the Supervisory Board of Sberbank d.d., Zagreb to appoint Dubravko-Ante Mlikotić for another term as Member of the Bank’s Management Board.