NBM President Octavian Armasu announced this at a press conference on Tuesday, noting that the National Bank made such a decision at a meeting of the Executive Committee on February 15. In addition, interest rates on overnight loans and deposits were also increased by 2 percentage points - from 10.5% to 12.5% ​​and, accordingly, from 6.5% to 8.5% per annum. At the same time, the norms of required reserves from funds attracted in Moldovan lei and non-convertible currency, as well as attracted in freely convertible currency, were left at the same level. Octavian Armasu explained that the new monetary policy decision is aimed at reducing inflationary pressures, in order to reduce the impact of shocks on the economy and restore its normal growth. He noted that many central banks are now resorting to such measures, which, against the backdrop of increased inflation at the global level, are revising their forecasts in terms of growth for the next quarters. The President of the NBM said that earlier, during the crisis associated with the pandemic, the National Bank of Moldova set low base refinancing rates in the country in order to stimulate rates, and now, like other central banks, it decides to raise them in order to limit inflation. Octavian Armasu stressed that the decision to raise the base rate applied to the main short-term monetary policy operations is intended to help ensure a speedy return to normal, absorb existing shocks and return to economic growth. He noted that when deciding to raise the base refinancing rate, the NBM also takes care of macro-financial stability in the country, reducing pressure on the trade and balance of payments in order to have market balance and monetary and foreign exchange stability. The President of the NBM explained that by raising the base refinancing rate it is impossible to "attack" the wave of inflation that comes from outside, it is impossible to "overcome" the supply shock, import inflation. “But this decision can reduce the consequences of these shocks, reduce the secondary effects of chain growth. We want the shocks to be absorbed by the economy as soon as possible, so that the economy returns to normal development and inflation returns to target levels,” Octavian Armasu stressed. “We are curbing inflation, raising the price of money to help reduce consumption. Yes, maybe someone will suffer temporarily from such a decision, but if rates are not raised, then we risk entering a new reality and have high inflation and low economic growth, and then there should be a constantly high refinancing rate. And we are raising the refinancing rate for a certain period, so that it is high for some period, and then returns to normal,” the head of the NBM said. He clarified that an increase in the base refinancing rate will increase rates not only on loans, but also on deposits, and this situation will encourage citizens to direct their available incomes not to consumption, but to savings. This will lead to a reduction in consumption, imports. Octavian Armasu did not make any forecasts regarding the possible corridor of the base refinancing rate, noting that the NBM will make decisions on monetary policy in the future, depending on the situation. It should be noted that the last time the NBM raised the refinancing rate was at its extraordinary meeting on January 13 this year. Then the National Bank of Moldova raised the base rate applied to the main short-term monetary policy operations by 2 percentage points at once. - from 6.5% to 8.5% per annum, and interest rates on overnight loans and deposits also increased by 2 percentage points - from 8.5% to 10.5% and, accordingly, from 4.5% to 6, 5% per annum. At the same time, the required reserve ratio from funds attracted in Moldovan lei and non-convertible currency was increased, starting from the period of applying the required reserves on February 16 - March 15, 2022, by 2 percentage points, and was set at 28% of the calculation base. The required reserve ratio from funds raised in freely convertible currency was then left unchanged.

Source: infomarket.md