The board of the National Bank of Moldova (BNM) today unanimously decided to raise the base rate on all short-term operations by 0.5 percentage point to 7.5% annually, in an attempt to curb inflation amid a persistent growth of aggregate demand.

BNM explained in a press release that the growing aggregate demand is due to higher salaries, pensions and other earnings and a rise in consumer loans reported in the first half of 2019.

Inflation is also influenced by the rising global food prices, the higher regulated prices as well as the consumption-driving stimulating policy for interests on loans and deposits. 

According to BNM, today’s decision is also expected to strengthen the national currency and discourage financial intermediation in foreign currencies. 

Also today, the central bank decided to increase interests on overnight loans by 0.5 percentage point to 10.5 percent annually. Rates on overnight deposits also rose from 4 to 4.5 percent.

The reserve requirements in lei and non-convertible foreign currencies were kept at 42.5 and 17 percent, respectively. 

Next BNM monetary policy update is expected on September 11.