Friday, December 3, 2021

Moldova raises rate 4th time to temper inflation

     Moldova's central bank raised its key interest rates for the fourth time this year, saying this "aims to create the monetary conditions necessary to temper the growth rates of consumer prices" amid rising inflationary expectations.
      The National Bank of Moldova (NBM) raised its base rate by 100 basis points to 6.50 percent and has now raised the rate 3.85 percentage points following rate hikes in July, September, October and today.
     The central bank also raised the rate on its other interest rates by 1 percentage point, with the interest rate on overnight loans now at 8.50 percent and the deposit rate at 4.50 percent.
     NBM said it would continue to closely monitor the domestic and international environment and "is prepared to take the necessary measures to achieve the fundamental objective of ensuring price stability."
     Inflation in Moldova, Europe's poorest country, jumped to 8.8 percent in October from 6.7 percent in September, above the central bank's target of 5.0 percent, plus/minus 1.5 percentage points.
     Today's rate hike comes after NBM's board at its regular meeting on Oct. 29 maintained its rate after raising it an an extraordinary meeting on Oct. 5, citing the uncertainty surrounding the impact of the country's "energy crises."
     In September Moldova's contract with Russia for gas supplies expired and the government had to declare a state of emergency in the energy sector, triggering the use of state funds to buy fuel.
     But last week Moldovagaz said it had paid Russia's Gazprom for the gas it had received in October and the first half of November, averting a possible crises, Reuters reported on Nov. 26.
     The payment of US$73 million was made possible after Moldova's parliament approved a budget amendment that allowed it to pay the money due.


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