October 27 (SeeNews) - Moldova's central bank, BNM, decided on Thursday to lower its key rate to 9% from 9.5%, 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 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 and raw materials along with the uncertainty related to a higher international price of oil.
The main internal risks and uncertainties arise from a delay in the adjustment of regulated tariffs and from the modification of excise duties, as well as from the quality of the country's 2017 harvest, the bank said.
According to data released recently by the country's statistics office, in the January-September period Moldova's gross agricultural output increased by 18.9% year on year.
Moldova's consumer price inflation decelerated to 3% year-on-year in September, its slowest level in 15 months, from 3.6% in August. BNM noted that the decline is in line with its latest forecast.
The central bank now projects 6.3% inflation for 2016 and 4.6% for 2017, revising its August forecast for 6.7% inflation for 2016 and 4.4% for 2017.
BNM also lowered the interest rates on overnight loans and deposits from 12.5% to 12% and from 6.5% to 6%, respectively.
However, the bank kept 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 sterilization operations, as scheduled," the bank added.
BNM last revised its key monetary rate on September 30, when it lowered it by 0.5%, to 9.5%.
(1 euro = 21.8732 Moldovan lei)