CROATIAN NATIONAL BANK COUNCIL CONVENES

ZAGREB, June 7 (Hina) - Analysts of the Croatian National Bank (HNB) estimate a recent increase in the prices of oil products could remain within the framework of a one-shot shift of all prices not exceeding the two percent point, HNB's Council said on Wednesday. The Council points out with concern that Croatia is almost outside the low inflation range, even compared to other countries in transition. One should not underestimate the danger of expectations that inflation will rise and influence further price movements. The HNB Council says it is willing to take resolute action to react to signals of a major growth in prices by tightening the monetary policy. Caution is especially necessary in view of the currently very high liquidity in the banking sector, because high liquidity entices a considerable drop in interest rates. Other monetary indicators show a significant increase in foreign savings, which continued throughout April. The real growth in savings exceeds 1.5 billion kuna (US$180.1 million), which is a certain indicator of restored trust in the domestic banking sector and the positive effects of cleansing the market of problematic banks. (hina) ha jn