May 12 (SeeNews) - Moldova's central bank decided to cut its base rate to 10% from 14% to continue the stimulative monetary policy measures adopted since the end of 2022, it said.
Interest rates on overnight loans and deposits also decreased by 4 percentage points - to 12% and 8% per annum, respectively, the central bank, BNM, said in a press release on Thursday.
This is the fourth cut in BNM's key rate since August, when the central bank had set it at 21.5% - the highest value since 2001.
The rate cut aims to stimulate aggregate demand by encouraging consumption and balancing the national economy while anchoring inflationary expectations, the BNM said.
Moldova's annual inflation slowed from 30.2% in December to 22% in March 2023. In April, inflation eased to 18.1%, below the BNM's forecast.
Tariff hikes along with the effects of the war in Ukraine, as well as last summer's drought and excise duty increases at the beginning of the year continued to keep inflation above target, but disinflationary demand, coupled with the appreciation of the Moldovan leu continue to mitigate these factors, the central bank said.
Moldova's economy shrank by an annual 5.9% in 2022, driven by low domestic demand, uncertainty in the region and a deteriorated harvest.
The BNM's executive board will hold its next monetary policy meeting on June 20.
(1 leu=19.4478 euro)