The Republic of Moldova saw a decline in inflation from 34% to 4% during a year and a half. The governor of the National Bank of Moldova (NBM) Anca Dragu said the purchasing power recovered mainly as a result of the strengthening of the country’s energy security and independence, IPN reports.

In an interview with Euronews Romania, Anca Dragu stated that ensuring price stability is the basic task of the NBM. “I’m proud to tell you that in Moldova we managed to have an inflation rate of slightly over 4%, down from 34.3% in October 2022. Now we are at slightly over 4% and this allowed us to reduce the monetary policy rate, the base rate to 3.75%,” said the governor.

She noted that in the three months since her appointment, a number of factors contributed to the decrease in inflation in the Republic of Moldova. “The disinflation process was quite serious in the course of 2023 and so the interest rates started to fall during this period from almost 20% to 3.75%. There are several contributing factors. The main factor is related to energy security and energy independence,” stated Anca Dragu.

According to her, in fact, this was also the factor – dependence on Russian gas – that led to an explosion in prices and that feeling of insecurity that amplified inflation. “Together with the identification of alternative solutions – connecting Moldova to the European electricity transmission system, also gas interconnections and gas storage in Romania and Ukraine - with this relaxation in terms of pressure from energy prices, we have seen a reduction in prices in general and also disinflation,” said the governor.

Anca Dragu also said that there were government programs that helped the vulnerable population to pay their bills and this also made a contribution. “This downward trend of regulated prices, mostly for electricity and natural gas, contributed significantly,” explained the NBM governor.