Wednesday, December 27, 2017

Moldova maintains rate, confirms shift to neutral stance

      Moldova's central bank kept its basic interest rate at 6.50 percent and said monetary policy in coming years will be based on the inflationary trend.
      The neutral guidance by National Bank of Moldova's (NBM) executive committee confirms the bank's shift away from 22 months of easing to neutral at its previous meeting on Dec. 5 when it said future monetary policy would be based on the risks and uncertainties associated with inflation.
       Earlier this month the NBM cut its rate by 50 basis points and has cut its rate by 250 basis points this year, and by 13.0 percentage points since February 2016 when it began lowering the rate from 19.0 percent.
       The central bank said its latest analysis confirmed its forecast from November although economic growth in the third quarter was higher than expected.
       Moldova's Gross Domestic Product expanded by an annual 5.4 percent in the third quarter, up from 2.5 percent in the second quarter, driven by demand and agricultural output.
       However, the NBM said economic activity is expected to move below its equilibrium level, with demand determined by wages, indexation and early re-valuation of pensions.
       Moldova's inflation rate eased to 7.3 percent in November from 7.9 percent in October, with the central bank saying this begins the forecast downward trend in inflation, with inflation expected to return to its target range in the first quarter of 2018.
       The NBM targets inflation of 5.0 percent, plus/minus 1.5 percentage points.


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