The National Bank of Moldova pursues the goal of anchoring inflation expectations, reducing and maintaining inflation in the variation interval of ± 1.5 percentage points from the inflation target of 5% in the medium term, said the governor of the National Bank of Moldova Octavian Armașu.

He told a news conference that the annual rate of inflation in October 2022 was 34.6%, up 0.6 percentage points on a month before. It was by 0.4 percentage points lower than the forecast value stipulated in the Inflation Report presented in November 2022, primarily due to the late inclusion of the heat charge.

“The given deviance was caused by the negative deviation of all the inflation components, except for the food prices. The upward trend followed by the foods prices in October 2022 was due to the hydrological drought of this summer, which affected the agricultural harvest by overlapping the pressure associated with costs against the rise in the rates of electricity and gas supplied to business entities and in fuel prices,” stated Octavian Armașu.

According to him, the forecasts concerning the evolution of international .prices in 2022 didn’t change significantly. For 2023, they were diminished in accordance with the developments of the last few weeks. “The risks and uncertainty associated with the last forecast derive from the import prices of energy resources and food products. On the other hand, the programs of subsidies that are to be provided to the population during the cold period of the year generate uncertainty over the medium-term inflation forecast. Furthermore, the 2023 state budget law and associated revenues and costs policy imply greater pro-inflationist pressure, including through the positive fiscal impulse from the perspective of the stimulation of aggregate demand,” said Octavian Armașu.

The Executive Board of the National Bank of Moldova decided on December 5 decided that the base rate applied on the main short-term monetary policy operations will be 20% a year, down 1.5% percentage points. The interest rate on overnight loans will be 22% annually, while on overnight deposits - 18% annually, also down 1.5% percentage points.