The tightening of monetary policy will affect the economic growth of Moldova in the short term, but the IMF supports this decision of the NBM.
The permanent representative of the International Monetary Fund in our country, Rogers Chawani, stated this in an interview with the Moldovan media. He drew attention to the fact that supporting economic growth while maintaining control over inflation is currently a difficult global task. Inflation is accelerating around the world, including in the EU, and most central banks have tightened monetary policy. Rising energy and food prices, as well as the disruption to global supply chains caused by the pandemic, have pushed up inflation in many countries, and these global factors, especially high food prices, are likely to continue to spur growth of inflation in 2022. As NBM President Octavian Armasu noted earlier, increases in regulated prices and tariffs for utilities, as well as a stronger-than-expected recovery in domestic economic activity, will continue to put pressure on inflation. Recently, consumer lending has revived, which also contributed to inflationary pressure. “Given that inflation reached 14% in December, the prospects for growth up to 20% are real for Moldova. The central bank took active steps, raising the base rate and reserve requirements to contain rising inflation, carefully aligning the scope and pace of monetary tightening depending on the sources of inflationary pressures. Monetary tightening will have an impact on economic growth in the short term, but we support the NBM's decision as it is necessary to contain the spillover effects of demand-side shocks, as well as to securely anchor inflation expectations and ensure economic stability,” said Rogers Chawani. According to him, the NBM will continue to calibrate its reaction to the sources of inflation, and in this regard, the current instruments are quite relevant. “Other measures to ease inflationary pressures should focus on removing bottlenecks in supply chains, improving competition in food and energy markets, and strategic investments in energy efficiency. Unfortunately, the effect of these urgent and necessary measures will become tangible only in the medium term,” stressed the IMF Resident Representative in Moldova. //18.02.2022 — InfoMarket.
