The National Bank of Moldova wants to foster financial intermediations in currency and to encourage the banks to do business in the national currency, to attract deposits and release loans in lei. In a meeting of the Economic Press Club hosted by the central bank on June 19, National Bank governor Octavian Armașu said it was decided to raise the mandatory foreign exchange reserves attracted in freely convertible currency by 3 percentage points in the period of using the mandatory reserves in freely convertible currency – June 16 – August 15, 2019, IPN reports.

In its June 19 meeting, the Executive Board of the National Bank of Moldova unanimously decided to increase the base rate on the main short-term monetary policy operations by 0.5 percentage points, to 7% a year. According to Octavian Armașu, the decision is determined by the inflationary pressures caused primarily by the rise in the salary fund and consumer loans and the expected positive fiscal impulse of 2019 and 2020 following the planned unblocking of foreign financing.

The Executive Board also decided to raise the interest rates on overnight loans by 0.5 percentage points, to 10% a year.

The governor said the decisions are aimed at attenuating the inflationary pressures and at stimulating savings so as to create monetary conditions for maintaining inflation in the limits of the variation interval  of plus/minus 1.5 percentage points from the inflation target of 5% in the medium term.

“Last month, inflation in the Republic of Moldova was 4.6% and it continues to go up. The National Bank will continue to monitor and anticipate the internal and external macroeconomic evolutions, the risks and uncertainty associated with inflation in the short and medium terms,” stated Octavian Armașu.

The next meeting centering on the monetary policy will be held on July 31.