The National Bank of Moldova (NBM) for this year set a target inflation of 5%. Currently, this is under 1%, possibly close to zero. The low rate of inflation is a consequence of the decline in consumption, the decrease in the aggregate demand at the domestic and foreign levels. The economies are now strongly intercalated and Moldova’s economy is currently open, said NBM governor Octavian Armașu, noting there are now no concerns about an upsurge in prices, IPN reports.

“We, through the monetary policy measures, try to support the aggregate demand, but the monetary policy probably has its limitations as to what can be done. For now, I’m not concerned about a swift increase in prices. We will possibly have a rise in prices if we manage to relaunch the economy in the course of 2021,” Octavian Armașu stated in an interview for the public TV channel Moldova 1.

According to the governor, the economy last year was significantly affected. The Gross Domestic Product, the aggregate demand and economic activism decreased considerably. The NBM took measures to relax the monetary policy and even to ensure additional liquidity in the sector. “We placed more free money in the banking sector for the banks to be able to support the economy, the business entities. To support the economy in such conditions, the monetary policy measures are probably not enough. Fiscal measures are also needed, which is state support for business entities, for the socially deprived groups,” noted the governor.

He also said that the undertaking of supervision in the financial nonbanking sector, which is the nonbank lending institutions and insurance companies, is a very important objective for the next two-three years. “It is an objective on which we should work during the next two-three years and I think we will enjoy the support of the foreign partners here and I bank a lot on the cooperation with the National Commission for Financial Markets in ensuring the switchover,” stated Octavian Armașu.