The National Bank of Moldova will use all the monetary policy instruments and will take all the necessary measures to bring the inflation down to 5% in the medium term, said governor Octavian Armașu. According to him, in the economic context existing in the Republic of Moldova, this level creates optimal conditions for economic growth and development and for the wellbeing of the citizens, IPN reports.
“It is our main objective and all the instruments of the NBM are used namely to achieve this level of 5%, depending on how the situation on the market develops. Depending on the subsequent economic developments, we will correspondingly adjust the monetary policy instruments,” the governor stated in an interview for the press.
By restrictive monetary policy, the NBM creates conditions that would encourage saving to the detriment of immediate consumption. It is evident that high inflation slows down economic growth and diminishes the purchasing power of the citizens. When a restrictive monetary policy is applied, the government should pursue an expansionist fiscal policy that would have a solid social component for supporting the vulnerable people.
“The economy is in the process of adjustment and this process will end when an inflation rate of 5% +/-1.5 percentage points is reached. Then we will be able to say that all the internal deviations in the economy were overcome and the economy is again in balance. Until then, we are in transition, in a process of adjustment that is painful, but is necessary for avoiding persistent inflation and, respectively, a more serious situation in the future,” stated the governor.
The NMB increased the base rate to 18.5% so that the interest rate on deposits could grow. The goal of the decision to increase the mandatory reserves is similar. “This way we want to stimulate saving, to encourage the banks to make the deposits in lei more attractive by raising the rates. We had discussions with representatives of banks on the issue. Currently, the baking sector is resilient and the citizens’ savings are safe. Statistics show that the depositors continue to prefer deposits in national currency and this show the population has confidence in our currency,” said Octavian Armașu.
