Friday, July 27, 2018

Moldova maintains rate as inflation to decelerate further

      Moldova's central bank kept its benchmark base rate steady at 6.50 percent as inflation is expected to steadily decline during the rest of this year before the path reverses at the start of 2019 and inflation starts to rise on the back of higher oil prices, fiscal stimulus and the comparison to this year.
      The National Bank of Moldova (NBM), which has been in a neutral policy stance since December last year, added that aggregate demand is forecast to remain moderate for the next 8 quarters due to the current monetary conditions and fiscal policy.
      In an update to its inflation forecast, the NBM trimmed its forecast for inflation to average 3.2 percent this year, down from May's forecast of 3.3 percent and March's forecast of 3.7 percent, and then rise to average 4.9 percent in 2019, unchanged from the previous forecast.
      Moldova's inflation rate reversed course in June after five months of decline and rose to 3.2 percent from 2.8 percent but is expected to decline to an average of 2 percent in the fourth quarter.
      But in the first half of 2019 inflation is expected to rise and remain at the upper end of the central bank's target range of 5.0 percent, plus/minus 1.5 percentage points, until the end of the forecast horizon by the second quarter of 2020.
      The latest inflation report will be released on Aug. 3.
      Modova's leu has remained firm this year after rising sharply last year and was trading at 16.6 to the U.S. dollar today, up 2.9 percent this year.



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