The annual inflation rate in Moldova will slightly decrease by the end of this year, and starting from the 2nd quarter of 2021 it will grow, and by the end of the 3rd quarter of 2022 it will reach the target inflation level - NBM
The National Bank of Moldova (NBM) announced this, noting that on November 6 the Executive Committee of the NBM unanimously voted to reduce the base rate applied to the main short-term operations of monetary policy by 0.1 percentage points - to 2.65 percent per annum. Similarly, interest rates on overnight loans and deposits were reduced to 5.15% and 0.15% per annum, respectively. This decision was aimed at supporting the domestic aggregate demand, the lending process and the economy as a whole, and was taken after the NBM approved the Inflation Review No. 4 on November 6. This report includes the latest analysis of the situation in the internal and external environment related to the inflationary process, economic activity, and the advancement of monetary policy. At the same time, the document, which will be published on November 13 this year, includes a new forecast, as well as associated risks and uncertainties. According to the new round of forecasts, the annual inflation rate will decrease slightly by the end of this year, and from the second quarter of 2021 it will receive an upward trajectory, reaching the target inflation level by the end of the forecast horizon. Deflationary pressure will persist throughout the entire forecast horizon - Q4 2020 - Q3 2022. Among the factors that reduce aggregate demand are the following: anti-epidemic measures a decrease in external demand, negative overall tax dynamics since the beginning of the year, real strengthening of the national currency, and also unfavorable agrometeorological conditions, which affected the volume of agricultural production. The COVID-19 pandemic carries a number of uncertainties related to the impact on economic recovery, agricultural production next year, and the timing and magnitude of tariff adjustments for regulated services. The NBM stresses the need for constant monitoring of the macroeconomic situation created by the consequences of the pandemic, recalling that in due time, without jeopardizing its main goal of ensuring price stability, it will take the necessary measures to maintain sufficient liquidity in licensed banks and maintain a viable and stable banking system. The next meeting on monetary policy will take place on December 9th. // 09.11.2020 - InfoMarket.
