April 27 (SeeNews) - Moldova's central bank, BNM, decided on Thursday to maintain its key rate at 9.0%, striving to keep inflation close to its 5.0% target.
"This decision is aimed at anchoring inflation expectations in the context of restoring and maintaining the inflation rate close to the target of 5.0% in the medium term, with a possible deviation of plus or minus 1.5 percentage points," BNM said in a statement posted on its website.
Through its decision, BNM aims to promote a monetary climate conducive to reviving lending and savings and to help domestic economic environment adapt to market volatility related to the external macroeconomic situation, it added.
The monetary policy stance depends on the risks and uncertainties associated with internal and external developments, BNM said. External risks are associated with the increase of international prices for food along with the uncertainty related to a higher international price of oil and gas.
The main internal risks and uncertainties arise from excessive persistence of liquidity in the banking system, from the modification of excise duties, fiscal deficit, as well as from the quality of the country's 2017 harvest, the central bank said.
However, the postponement of adjustments in tariffs for regulated services and the reinclusion of liquefied gas price into the Methodology of formation and application of prices for oil products, adopted in the first quarter of 2016, generate disinflationary pressures, it added.
Moldova’s agricultural output increased by 18.6% last year, latest data from the country's statistical office showed.
Consumer price inflation accelerated to 5.1% year-on-year in March, from 4.7% in February.
The bank now projects 6.8% inflation in 2017 and 5.1% in 2018.
BNM also decided to keep the interest rates on overnight loans and deposits at 12% and 6%, respectively.
Also, the central bank kept the required reserves for deposits in freely convertible currency at 14%.
However, it increased the required reserves ratio from financial means attracted in Moldovan lei and non-convertible currency by 3 percentage points, reaching the level of 40%.
"In order to support the proper functioning of the inter-bank money market, the BNM will continue to manage firmly the excess liquidity through sterilization operations, as scheduled," the central bank added.
BNM last revised its key monetary rate in October, lowering it by 0.5%, to 9.0%.
(1 euro = 21.0158 Moldovan lei)