Monday, May 11, 2020

Moldova leaves key rates steady amid disinflation

     Moldova's central bank left its main interest rate steady at what is said was a "stimulating" level that supports lending amid continued disinflationary pressures that has allowed monetary policy to support demand and ease the consequences of the coronavirus pandemic.
     The National Bank of Moldova's (NBM) executive committee unanimously maintained the base rate at 3.25 percent along with the the rate on loans and overnight deposits at 6.25 percent and 0.25 percent, respectively.
      NBM has lowered its policy rate twice this year by a total of 225 basis points, with the first cut on March 4 and then a second cut at an extraordinary meeting on March 20. On that day, it also lowered the reserve ratio on banks' domestic liabilities by 250 basis points.
       Since December 2019, when NBM cut its rate by 200 basis point, the rate has been lowered by 4.25 percentage points.
      The central bank said it was continuing to monitor the macroeconomic situation caused by the Covid-19 pandemic and would maintain sufficient liquidity in the banking system without compromising its fundamental objective of price stability.
     Currently, there is an increased degree of uncertainty regarding the magnitude of the crises created by the virus, the subsequent economic recovery, and the evolution of commodity and energy prices.
     Inflation in Moldova eased to 5.25 percent in April from 5.9 percent in March, the fourth month in a row of deceleration from 7.5 percent in December 2019.
       NBM targets inflation of 5.0 percent, plus/minus 1.5 percentage points..


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