June 3 (SeeNews) - Moldova's central bank decided to raise its policy rate to 18.5% from 15.5% in order to temper the rise in consumer prices and to mitigate risks stemming from the war in Ukraine, it said on Friday.
Interest rates on overnight loans and deposits will also increase by 3 percentage points - to 20.5% and 16.5% per annum, respectively, the central bank, BNM, said in a press release.
This is the highest level of the key rate in six years, data posted on the BNM's website showed. During September 2015-January 2016, the rate stood at 19.5%.
The decision aims to limit the effects of a second round of external price shocks, balancing aggregate demand, stimulating savings over immediate consumption and easing pressures on the depreciation of the national currency due to rising current account deficits and capital reflux, the BNM said.
According to BNM, regional and global economic conditions remain affected by risks and uncertainties associated with the tense situation created by the war in Ukraine. Inflation has risen globally at an accelerated pace, mostly due to a continued growth in quotations on international markets for raw materials, food and energy resources, along with disruptions in supply, production and transportation chains, the central bank noted.
Under these circumstances, central banks have revised upwards their inflation forecasts for the coming quarters and in response maintained an anti-inflationary monetary policy.
"The regional and international context unbalances the domestic macroeconomic situation and puts pressure on inflation through the import channel. Compared to other states, the Republic of Moldova has an increased dependence on quotations and developments on international markets, which makes it even more vulnerable to price shocks," the BNM said.
Moldova's consumer prices rose to a 23-year high of 27.07% year-on-year in April, compared to an annual increase of 22.16% in the previous month, the latest data from the National Bureau of Statistics showed.
The central bank's executive board will hold its next monetary policy meeting on August 8.
(1 euro = 20.3571 Moldovan lei)