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Created on 15.09.2011

Taking into account the holding downward impact of domestic demand on inflation and there has appeared a number of other factors with predictably downward pressure on inflation, the Bank of Latvia Council today resolved to leave unchanged both the interest rates set by the Bank of Latvia and the mandatory reserve requirement for the banking sector.

In recent months the trend of abating inflation has become evident with only the raising of several tax rates preventing a more rapid drop in prices: raised taxes have accounted for one third of this year's inflation. As the global prices of energy resources and food are stabilizing and assuming that the Government will refrain from raising any taxes, a substantial drop in inflation can be predicted for next year. Domestic demand is growing slowly and represents no risk of rising prices; moreover it is becoming likely that economic growth in Latvia will be slower next year as the demand in external markets drops because of the global debt crisis.

The Report of the Governor of the Bank of Latvia, Ilmārs Rimšēvičs, at today’s press conference will be available in the news section of the Bank of Latvia’s home page www.bank.lv . 

 

The interest rates set by the Bank of Latvia are as follows:

 

In effect as of

% per annum

Bank of Latvia refinancing rate 

24.03.2010.

3.5

Bank of Latvia marginal lending facility rate to banks that have used the facility no more than 5 working days within the previous 30 day period

09.12.2008.

7.5

Bank of Latvia marginal lending facility rate to banks that have used the facility no more than 10 working days within the previous 30 day period

09.12.2008.

15.0

Bank of Latvia marginal lending facility rate to banks that have used the facility more than 10 working days within the previous 30 day period

09.12.2008.

30.0

Bank of Latvia overnight deposit facility rate

 

24.11.2010.

0.25

Bank of Latvia 7-day deposit facility rate

24.11.2010.

0.375

The Bank of Latvia approved a new edition of "System Regulation for Participation in the ECS". The new edition will take effect on 21.11.2011.

The principal changes in the "System Regulation for Participation in the ECS" are mostly related to expanding the circle of participants in the Electronic Clearing System by introducing indirect participation. Thus, in addition to banks and the State Treasury, indirect participants, such as a postal business and credit union will be able to take part in the system. Likewise, changes have been made in the euro functionality of the ECS clearing, providing the opportunity for system participants to make settlements on payments exceeding 50 thousand euro on the condition that there are sufficient funds in the participant's account. The number of clearing settlement cycles has also been increased from 3 to 4 clearing cycles per day for payments in euro, which will allow the participants in the ECS system to offer their clients faster and more efficient service and reduce system risks.

ECS is a Bank of Latvia payments system whereby banks and other system participants make payments in lats and euro on behalf of their clients: it is the infrastructure or means for conducting payments between banks. As of 1 January 2008, Latvian commercial banks can perform fast and efficient settlements for their clients' domestic payments in euro and, as of 9 November 2010, for their clients' payments throughout Europe (within SEPA).