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Aug 10, 2023 13:28 EEST
August 10 (SeeNews) - Moldova's central bank decided to keep its monetary policy rate unchanged at 6% after five previous cuts delivered since August 2022 in an effort to bring inflation back within its target band of 3.5%-6.5%.
Interest rates on overnight loans and deposits were also maintained at 8% and 4% per annum, respectively, the central bank, BNM, said in a press release on Wednesday.
The central bank's decision was determined by the confirmation of its previous forecast as well as new estimates which foresee an easing of annual inflation to 9.2% in the third quarter of 2023 and a further deceleration to the target band of 3.5%-6.5% in the fourth quarter, where it is expected to be maintained until the second quarter of 2025.
The timely adoption of restrictive monetary policy measures through 2022 led to the easing of inflationary pressures. After a peak annual inflation rate of 34.6% in October, the inflationary process reversed, with annual rates reaching 13.2% in June and 10.1% in July.
This is the fifth cut in the BNM's key rate since August, when it stood at 21.5% - the highest level since 2001.
The five previous rate cuts were aimed at supporting the balancing of the national economy by creating monetary conditions to boost lending in the context of decreasing related costs while stimulating consumption and boosting aggregate consumption.
The BNM intends to configurate its monetary policy in line with keeping inflation close to the 5% target in the medium-term, while creating all the preconditions for the implementation of a mix of macroeconomic policies associated with economic growth.
Uncertainties with regard to the inflation outlook revolve around supply shocks stemming from the war in Ukraine, the timing of the relaxation of monetary policies across the globe and quotations of energy resources and raw materials. Domestic uncertainties include the supply and prices of energy resources, tariff adjustments, the flow of refugees, weather conditions and agricultural production. While forecast risks and uncertainties are high, the balance of risks remains disinflationary.
The BNM's executive board will hold its next monetary policy meeting on September 19.
(1 euro=19.4272 Moldovan lei)
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