Friday, October 29, 2021

Moldova maintains rate after emergency hike early Oct

     Moldova's central bank left its benchmark interest rate steady after raising it an extraordinary board meeting earlier this month, saying an important reason for today's decision was the uncertainty associated with the energy crises, where rising prices for natural gas and oil will slow global economic activity, impacting domestic demand and activity.
     The National Bank of Moldova (NBM) kept its base rate at 5.50 percent after raising it by 85 basis points at an extraordinary board meeting on Oct. 5 to counter inflationary pressures from the second-round effects of the rise in energy, food, production and distribution costs.
     The rate earlier this month was NBM's third hike this year and the rate has been raised by a total of 2,85 percentage points following earlier increases in July and September.
     The bank's board today said today's policy decision took into account the pressures from domestic supply and demand, especially in the last four months, the rise in incomes along with the increase in consumer loans and mortgages.
    The central bank said a resolution of the "ongoing energy crises" is tied to government talks with Russia and other suppliers on new contracts for natural gas imports after the previous one expired last month, and it is difficult to anticipate the outcome of this.
     The expiry of the previous contract has forced the government into declaring a state of emergency in the energy sector, which includes using state funds to buy fuel.
     Last week Moldova secured preliminary approval for a US$564 million loan from the International Monetary Fund (IMF), which may unlock more funding from the European Union.
     Last year Moldova, the poorest country in Europe, received 127 million euros in aid.


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