August 29 (SeeNews) - Moldova's central bank, BNM, cut its key rate to 7.5% from 8.0%, striving to keep inflation close to the target level.
"The decision was taken based on the recent macroeconomic analysis and assessments, as well the risk estimations of inflation evolution on short and medium term," BNM said in a statement late on Monday.
BNM added that the inflationary pressures in the medium-term have been offset due to a slowdown in economic activity and the appreciation of the national currency in real terms.
Moldova's economy expanded by an annual 3.1% in real terms in the first quarter of 2017, according to official data. Quarter-on-quarter, Moldova's GDP fell 0.7% based on seasonally adjusted data.
Moldova's consumer price inflation was 7.3% in July, at the same level as in the previous month, latest data from the National Bureau of Statistics, BNS, showed. This is still above the upper limit of the range of plus/minus1.5 percentage points from BNM's 5.0% inflation target.
The central bank now projects 6.5% inflation in Moldova in 2017 and 4.4% in 2018. Previous BNM projections put inflation at 6.8% in 2017 and 5.1% in 2018.
BNM also decided to decrease the interest rates on overnight loans and deposits to 10.5% from 11.0% and to 4.5% from 5.0%, respectively.
The central bank kept the required reserves for deposits in freely convertible currency at 14% and the required reserves for deposits in Moldovan and other non-convertible currency at the current level of 40%.
"In order to support the proper functioning of the interbank money market, the BNM will continue to manage firmly the excess liquidity through sterilization operations, as scheduled," the central bank said.
BNM last revised its key monetary rate in June, lowering it by 1.0%, to 8.0%.
(1 euro = 21.3586 Moldovan lei)