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HSBC reduces base rate to 4%

Following the decision made by the Central Bank of Malta to reduce the Central Intervention Rate and the Discount Rate by 25 basis points to four per cent, HSBC Bank Malta has announced that, with effect from 5 February, the interest rates on all of its personal and commercial lending products, including home loans, will be reduced by 0.25 per cent.

The interest rate on credit card balances will be reduced by 0.25 per cent, with effect from statements issued after 6 March 2002.

HSBC Bank Malta p.l.c. also announced that, with effect from 5 February 2002, it will be reducing credit interest rates on its Maltese Lira term deposit and savings products by 0.25 per cent. It will also be reducing the interest paid on its current accounts by 0.5 per cent.

The interest paid on Karus accounts will be lowered by 0.25 per cent on the present rates, except for balances below Lm125, where the interest rate remains unchanged at 4 per underlying inflation had abated.

The Central Bank’s Monetary Council had arrived at the decision after considering recent international and domestic economic and financial developments within the context of the objectives of the Bank’s monetary policy.

The Council reviewed conditions in the international economy and noted that world economic activity remained weak. As a result, official interest rates in major industrial countries had been reduced further, reinforcing expectations of a global economic recovery in the second half of the year. Despite lower domestic market interest rates, the premium on Maltese lira assets remained high.

The Council also examined domestic economic conditions and noted that the available indicators suggest that demand remained subdued. Imports had decreased, leading to a narrowing of the deficit on the current account of the balance of payments. Consequently, the upward trend in the official external reserves was maintained. At the same time, credit growth decelerated. Although the headline inflation rate continued to rise, there was evidence that underlying inflation had abated.

The Bank explained that a global recovery later this year could stimulate domestic economic activity, leading to some acceleration in output growth. To fully capture the benefits of an international recovery, however, the Council reiterates the importance of pursuing fiscal consolidation, wage moderation and structural reform in defense of the economy’s long-term competitiveness.

The Business Times, Network House, Vjal ir-Rihan San Gwann SGN 07
Tel: (356) 382741-3, 382745-6 | Fax: (356) 385075 | e-mail: editorial@networkpublications.com.mt