Moldova's c-bank cuts key rate to 3.6%

The overnight loan and deposit rates were reduced by 0.15 percentage points to 5.6% and 1.6%, respectively, the central bank, BNM, said in a press release on Tuesday.

The rate cut is aimed at further stimulating aggregate demand, including by encouraging consumption and investment, and anchoring inflationary expectations.

This marks the ninth reduction in the BNM's policy rate since December 2022, when it was decreased from 21.5%, the highest level since 2001.

Moldova's annual inflation eased to 3.9% in March from 4.2% a month earlier, slightly below expectations.

The central bank attributed the disinflationary trend to decreasing demand, reduced food prices on the international market, last year's abundant harvest, lower utility tariffs, and winter energy subsidies.

The central bank expects inflation to remain around the target rate of 5.0%, with fluctuations within a range of approximately ±1.5 percentage points over the next eight quarters.

Aggregate demand is expected to remain subdued due to current monetary conditions and weaker external demand. However, a positive fiscal impulse is expected to mitigate the decline in demand.

The BNM's executive board will hold its next monetary policy meeting on June 20.

(1 euro=19.3481 Moldovan lei)