Moldova's c-bank lowers key rate to 5.5% from 7.5%

The decision aims to maintain inflation within the target range of 5%, which represents an optimal situation for national economy development, the national bank BNM said in a statement on Wednesday evening.

At the same time, the decision corresponds to the latest forecasts on inflation development, which mentioned that the bank will need to adjust its policies in the direction of a relaxation, due to a decrease in consumer prices expected for next year.

With disinflationary conditions forecast for 2020, the central bank expects its decision to support the economy’s competitiveness and boost lending activity.

BNM also decided to lower the interest rates on overnight loans to 8.5% from 10.5% per year and on overnight deposits to 2.5% per year from 4.5%.

The reserves ratio on deposits in local and non-convertible currency was lowered to 42% from currently 42.5% during January 16 -February 15, to 41.5% for February 16 - March 15 and to 41% between March 16 - April 15.

The required reserves ratio on deposits in freely convertible currency was lifted to 18% from currently 17.0% of the base for January 16 -February 15, to 19% for February 16 - March 15 and to 20% between March 16 - April 15.

Moldova posted an annual consumer price inflation of 7.1% in November, up from 6.8% in the previous month, the National Bureau of Statistics, BNS, said.

BNM maintained its 2019 inflation projection at 5.0% in its latest report issued in November. In 2020, consumer prices are expected to rise by 5.9%, down 0.8 pp compared to the increase projected in August.

(1 euro=19.233 Moldovan lei)