The National Bank’s board has decided to raise the base rate by two whole points to 10.5% per annum. Overnight rates have also increased by two points to 12.5% for loans and 8.5% for deposits.

The central bank said this is due to “external inflationary tendencies” that have “a significant impact domestically”. This is in particular the case of raw material, food, and energy prices, compounded by disruptions in production and supply chains.

National Bank head Octavian Armașu noted during a press conference today that prices in Moldova are vulnerable to foreign factors, in addition to local ones. “The upward inflation trend has been driven by rising international food and energy prices, which led to rising domestic prices and tariffs. The adjustment of tariffs, the increase in fuel prices, but also the upward dynamics of wages have led to increased costs for businesses, which have gradually introduced these additional costs into prices.”

At the same time, consumption has been fueled by accelerated borrowing, bigger salaries and a decreased tendency among households to save up.

“To protect people’s real incomes and savings and create conditions for healthier and more sustainable growth in the medium and long term, excess demand needs to be discouraged. Therefore, monetary policy tightening measures are needed, which are used by central banks, including those in countries with advanced economies”, said Armașu.

In January 2022, inflation stood at 16.6%, 2.6 points on the previous month, due to higher food prices (+7.6 points), core inflation (+4.2 points), regulated prices (+2.9 points) and fuel prices (+1.9 points).