​NBM RAISES BY 2% RATES OF MONETARY POLICY INSTRUMENTS

At the Thursday’s meeting, the National Bank of Moldova (NBM) Administrative Board raised rates of the monetary policy instruments from 6.5% to 8.5%. This is already the third raising since the beginning of December 2014.

According to the NBM, the short-term transactions base rate will be 8.5%, overnight credits – 11.5%, overnight deposits – 5.5%.

Only the required reserves ratio from funds attracted remained unchanged – 14%. At the same time in terms of lei it is growing by 2%, thus in the period of February 8 - March 7 it will make 16%, while in March 8 - April 7 – 18%.

The NBM press release says that the decision is due to increase in inflation expectations, including the national leu currency depreciation. In 2015 it may lead to raising of tariffs on services [natural gas, electricity].

According to the bank, the situation is worsened by the threat of recession in European countries’ economies and in Russia – Moldova’s main trade partners. In connection to this, the currency inflow, as well as volume of currency remittances from abroad may go down. This fact may also negatively affect the inflation level.

The NBM decision is directed to containment of inflation expectations and maintaining the inflation for mid-term period within the target rate of 5% ± 1.5%. At the same time, the bank says that in 2015 the inflation will be of 5.8%, while in 2016 – 6.1%.

The NBM explains its decision to raise the required reserves ratio in lei by the necessity to sterilize the excessive liquidity, which appeared over the last few months.

For supporting a normal functioning of the interbank money market, the NBM promises to continue firmly controlling the excessive liquidity by means of sterilization operations in accordance to the schedule.

The next Administrative Board meeting on monetary policy will take place on December 29.

Infotag’s dossier: Last time monetary policy instruments were raised on December 29, 2014 – by 2%. Earlier, at the December 11 extraordinary meeting, these went up by 1%. And before that, the rates had not been changed since late April 2013, when they were lowered by 1%. The required reserves ratio of 14% had not changed since June 2011.