The National Bank of Moldova on March 15 decided to increase the base rate applied to the main short-term monetary policy operations by 2 percentage points to 12.50 percent annually. The interest rates on overnight loans and deposits were raised by 2 percentage points to 10.50 percent and 12.50 percent, respectively, IPN reports.

The Bank explained such a decision was taken due to the inflationary pressure.

“The NBM’s decision is aimed at fighting the effects of inflation so as to temper the accelerated growth rate of prices and to also further protect the savings deposited by citizens in banks in the Republic of Moldova,” said the central bank.

Also, the decision is designed to temper the effects associated with the regional crisis so as to diminish the pressure that leads to the depreciation of the national currency following the rise in the current account deficit and trade deficit and is aimed at reducing the capital outflow.

The decision will also impact the loans and deposits, which will increase in value. The central bank expects the population’s consumption influenced by lending will decline and the people will less actively make savings.

“The lending activity continues to generate pressure on the inflation process, witnessing high growth rates in February too (+49.7%), even if the annual growth rate of loans in national currency decreased slightly,” noted the Bank.