The NBM raised the base rate applied to the main short-term monetary policy operations by 2 pp at once - from 6.5% to 8.5% per annum.
It is noteworthy that the basic refinancing rate rises immediately by 2 percentage points for the first time since the fall of 2015, when the rate was raised from 17.5% to 19.5%. According to the National Bank, at the same time, the current decision of the NBM also increased by 2 pp. interest rates on overnight loans and deposits will be increased - from 8.5% to 10.5% and, accordingly, from 4.5% to 6.5% per annum. Herewith, the ratio of required reserves at the expense of funds attracted in Moldovan lei and in non-convertible currency increases, starting from the period of application of required reserves in Moldovan lei from February 16 to March 15, 2022, by 2 percentage points and is set at 28% of the calculated base. The required reserve ratio at the expense of funds attracted in freely convertible currency remains unchanged. The Executive Committee of the National Bank made such decisions at an extraordinary meeting of the NBM held on January 13, approving these measures of monetary policy in order to reduce the impact of shocks on the economy. As noted in the National Bank, an extraordinary meeting of the NBM Executive Committee was prompted by the analysis and assessment of the latest macroeconomic information related to the external and internal environment, especially the recent acceleration of inflation. The NBM indicates that the configuration of monetary policy is aimed at curbing inflationary pressures in order to reduce the impact of shocks on the economy in order to return to equilibrium as soon as possible. Such measures are resorted to by central banks, which, against the backdrop of rising inflation at the global level, are revising their inflation forecasts upward for the coming quarters. The National Bank emphasizes that the recent acceleration of inflation indicates the vulnerability of the internal inflation process to external events, explains the recent acceleration of inflation, which is mainly associated with supply shocks in terms of growth in world and regional prices for food, energy and other raw materials, which affected import prices. Meanwhile, inflationary pressures are also coming from the demand side in the context of increased disposable income and consumer lending, which supported the rise in prices for the subcomponents of core inflation, as well as in food prices. Herewith, new loans issued in the national currency maintained their growth trend in December 2021, close to historical highs, their volume increased by 46.7% in annual terms. As noted in the NBM, thus, the increase in the base rate, combined with the increase in the required reserve ratio, is aimed at reducing the growth rate of consumer lending, which currently has a strong pro-inflationary impact, and also puts pressure on the current account deficit, the balance of payments, trade balance and exchange rate. It should be noted that the last time the NBM changed the base refinancing rate was December 3, 2021, when, taking into account inflationary expectations, it increased the base rate applied to the main short-term monetary policy operations by 1 percentage point - from 5.5% to 6. 5% per annum. Then by 1 pp. interest rates on overnight loans and deposits were increased - from 7.5% to 8.5% and, accordingly, from 3.5% to 4.5% per annum. // 13.01.2022 — InfoMarket
