The inflation rate in the Republic of Moldova follows a downward trend. This declined from 34.6% last November to 18.1% at the end of April, the governor of the National Bank of Moldova (NBM) Octavian Armașu told a news conference.
“It is also the result of the monetary policy measures taken by the National Bank of Moldova and these measures enabled the inflation to return under control, not to rise further and, as you see, it firmly returns to the inflation target,” said the governor.
He noted that the aggregate demand will be negative in the course of this year and in the first quarter of next year owing to the deterioration of household finance, the negative foreign demand and the restrictive monetary conditions. The fiscal impulse will attenuate the decline in aggregate demand and will lead to a positive aggregate demand in the third quarter of next year. The real monetary conditions for the rise in aggregate demand will be significantly restrictive for the whole forecast period.
According to Octavian Armașu, the annual rate of inflation will follow a fast downward trend this year and a relatively stable trend later, until the end of the forecast period. Inflation will return to the variation interval of the inflation target in the fourth quarter of 2023 and will remain there until the end of the forecast period. The high annual rate of inflation will be due to the regulated prices, food prices and basic inflation.
Recently, the NBM decided to decrease the basic rate by 4 percentage points. The governor said the interest rates on loans were reduced to stimulate lending, which can boost economic growth.
As to the appreciation of the Moldovan lei, Octavian Armașu said the institution does not oppose the trend and intervenes only to remove excessive volatility. “The low demand is the cause of appreciation. To remedy the situation, we must stimulate economic recovery and reinvigorate demand. If these things are achieved, the market will be balanced out and the exchange rate will slowly return to normality,” stated Octavian Armașu.
