March 23 (SeeNews) - Moldova's central bank said it decided to lower its base rate to 14% from 17% to continue the stimulative monetary policy measures adopted since the end of 2022.
Interest rates on overnight loans and deposits also decreased by 3 percentage points - to 16% and 12% per annum, respectively, the central bank, BNM, said in a press release on Tuesday.
This is the third cut in BNM's key rate since August, when the central bank had set it at 21.5% - the highest value since 2001.
The decision aims to stimulate demand by encouraging consumption and balancing the national economy while anchoring inflationary expectations.
Annual inflation decreased by 1.4 percentage points to 25.9% in February, one percentage point higher than the forecast, mainly due to a 5.1 percentage point hike in regulated prices. Tariff hikes coupled with the effects of the war in Ukraine and last summer's drought are keeping inflation above target, but disinflationary demand and monetary policy measures from mid-2022 continue to mitigate these factors.
External demand remains weak, impacted by lower and more stable prices on international energy resource markets.
Following the BNM's last two decisions to ease its monetary policy, the interest rates on deposits in Moldovan lei decreased, while those on loans slightly increased. Interest rates on loans and deposits in foreign currency decreased insignificantly. The weighted average rate on deposits was 11.1% in February, 1.94 percentage points down from January, while loans stood at 14.34%, inching up by 0.08 points.
Uncertainties remain high, while the balance of risks to the inflation forecast deviation is disinflationary. Risks centre around the regional geopolitical situation, the statistical reflection of energy price compensation schemes as well as lower external demand and prices. The main uncertainties regarding global demand are the impact of the end of China's zero-Covid policy and the U.S. reaching its debt ceiling.
The BNM's executive board will hold its next monetary policy meeting in May.
(1 leu=20.0947 euro)