Moldova’s central bank cut its basic interest rate by another 50 basis points to 6.50 percent but shifted away from an easing stance after 22 months to a neutral stance by saying the future monetary policy configuration will be based on the risks and uncertainties associated with inflation.
The National Bank of Moldova (NBM) has now cut its rate by 250 basis points this year and by 13.00 percentage points since February 2016 when it began lowering the rate from 19.0 percent.
Today’s guidance by the central bank compares with its guidance from October when it said it expected to continue cutting the rate in coming months as inflation was expected to fall rapidly beginning in the fourth quarter.
According to the central bank’s latest forecast, aggregate demand will continue to generate disinflationary pressures and the inflation rate is expected to return to the bank’s target range of 5.0 percent, plus 1.5 percentage point in the first quarter of 2018.
At the same time, the central bank said it had taken note of the rise in October inflation to 7.9 percent in October from 7.6 percent in September due to higher food prices from less favorable weather in the last three months.
Moldova cuts rate another 50 bps, but shifts to neutral