Moldova's central bank cuts key policy rates

The National Bank of Moldova (NBM) on Friday lowered the key interest rate by 1 percentage point to 8 percent. The central bank said in a statement it also cut interest rates, also by 1 percentage point, on overnight and long-term loans to 10.5 percent and 8 percent, respectively, Info-Prim Neo reports. To enhance liquidity in banks, the NBM decided at the same time to lower reserve requirements by 2 percentage points, from 16 to 14 percent, thus making available 233.5 million lei, 11.5 million US dollars and 12.7 million euros to banks for further lending. According to the NBM, these steps have been taken to further orientate interest rates on loans and deposits towards a downward trend and enhance money supply. The possibility of cutting the key rate and reserve requirements has been favored by a downward trend in inflation since June 2008. The National Statistics Bureau reported that in June 2009 there was a 0.8 percent deflation. “The presence of conditions for further liberalization of the NBM's monetary policy is also indicated by the fact that inflation expectations and the risk of a sharp depreciation of the national currency are insignificant”, the central bank said in its statement.