There are great chances that by the end of 2023 inflation in Moldova will return to the target corridor of ±1.5 p.p. from the medium-term target of 5% - the NBM.
Governor of the National Bank of Moldova, Octavian Armasu stated this while responding to a question of the InfoMarket agency after presenting the decision of the Executive Committee of the NBM to reduce the base rate applied on main short-term monetary policy operations by 3 percentage points - to 17% per year. He noted that the NBM Executive Committee approved for publication the Inflation Outlook, which will be presented next week. According to the current forecast, annual inflation in Moldova will decline rapidly this year and will return to the variation interval of the inflation target in the second quarter of 2024, where it will remain until the end of the forecast horizon. "However, we are operating on average quarterly figures here. But some indicators, monthly indicators of annual inflation may be in the corridor of the target inflation by the end of this year," explained the head of the National Bank. He underlined that the goal of the National Bank is to restore and keep the inflation within the deviation range of ±1.5 percentage points from the medium-term inflation target of 5%. According to the current projections of the NBM, annual average inflation will be 13.7% this year and 5.5% next year. Octavian Armasu also drew attention to the fact that inflation in Moldova is slowing down because of the decrease of all its subcomponents. "As for the monthly inflation, in recent months it is about 1% or lower, while before, in the middle of the last year, monthly inflation exceeded 2% and even reached 3% per month. We are seeing an overall slowdown in inflation. Of course, there are some segments where there are faster price increases, but overall we see that price increases have been reduced a lot. Inflation has slowed down. We don't see a drop in prices, there is no deflation. But we do see price increases slowing in international markets, and some prices are even going down. The matter concerns primarily oil products and many food products. This will affect the Moldovan market as well. We expect this; we see inflation moving steadily toward the target corridor, we see that aggregate demand remains very low. We see that GDP is below potential. Accordingly, by loosening the monetary policy, we want to support aggregate demand, to revive the economy, so that its level reaches its potential," the NBM Governor stressed. // 08.02.2023 - InfoMarket
