BY MEANS OF CHANGING MONETARY POLICY INDICATORS NBM SLOWS DOWN INFLATION – BANK PRESIDENT

The National Bank of Moldova is operating with the rates of its monetary policy instruments for regulating the growing inflation, said NBM President Octavian Armasu at the meeting with journalists of the Economic Press Club on Wednesday.

He said that the noticeably increased consumption crediting, on the one hand, and the growth of salaries in the real sector of economy which reached 23%, on the other hand, started to exert a tangible pressure at the level of inflation.

“The annual consumption price index accounted for 4.6% in May, which meets the target goal (5% ± 1.5%), but in the second half of 2019 the inflation may go beyond the NBM’s target corridor”, the banker said.

He explained that this is what members of the NBM Executive Committee were taking into account when unanimously decided to raise by 0.5% the base rate – to 7% from 6.5%, the rate on overnight credits – to 10% from 9.5%, and on overnight deposits – to 4% from 3.5%.

According to Armasu, the regulator also considerably raised the required reserve ratio from funds attracted in convertible currencies – to 17% from 14%, leaving the reserve in national currency at 42.5%.

“In this way the NBM is trying to make the population, economic agents and banks to operate more with the national currency and less with convertible currencies, responding to the growing profitability of the Moldovan leu”, the banker said.

Answering to Infotag’s question about the reaction the NBM expects from the market in general and banks in particular concerning the recent decisions, Armasu said that the regulator will be analyzing the banks’ behavior, how they will be further building business.

“Banks got carried away by consumption credits, which stimulates imports and presses the inflation, for which the NBM is responsible. It is necessary that the growth of crediting to more actively influence the real sector of economy”, the banker said.

Talking about the national currency exchange rate, he pointed that by means of base rate, the regulator supports the profitability of the Moldovan leu and its stable exchange rate.

NBM President said that the volume of the current liquidity in the banking sector, whose sum currently exceeds 5 billion lei, which are unevenly distributed through banks.

The NBM leadership expects that the external financing to Moldova will be resumed in the second half of 2019 and additional sources of financing will appear.