August 25 (SeeNews) - Moldova's central bank, BNM, decided on Thursday to maintain its key rate at 10%, striving to keep inflation rate 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.
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 central bank also said that external risks to inflation remain high, given the weak economic activity of the eurozone countries and the continuing recession in the Russian Federation, which are Moldova's main trading partners. Internal potential risks are related with delays in planned tax reforms.
However, due to favourable weather conditions, Moldova will post a higher agricultural output, which could temper food prices for two or three quarters in a row, BNM added.
Moldova's annual inflation cooled to an 13-month low of 7% in July from 7.4% in June.
BNM noted that the decline is in line with its latest forecast.
BNM maintained the interest rates on overnight loans and deposits to 13.0% and to 7.0% respectively.
The bank said it will also keep the required reserves for deposits in freely convertible currency at 14.0%, and the required reserves from deposits in Moldovan and non-convertible currency at the current level of 35.0%.
"In order to support the proper functioning of the inter-bank money market, the BNM will continue to manage firmly the excess liquidity through sterilisation operations, as scheduled," the bank added.
BNM last revised its key monetary rate on July 4, when it lowered it by 3.0 percentage points, from 13% to 10%.
(1 euro = 22.4038 Moldovan lei)