Skopje, 10 May 2023 (MIA) - The National Bank continues to tighten monetary policy, increasing the interest rate on CB bills by additional 0.25 percentage points to the level of 5.75%.

The National Bank’s Operational Monetary Policy Committee decided at a session on Tuesday to raise the overnight and seven-day loan interest rates to 3.65 % and 3.70 %, respectively. The supply of CB bills at the regular auction remains unchanged and amounts to Mden10 billion.

"The latest change continues the cycle of monetary policy tightening, which began at the end of 2021, first through active management of liquidity through interventions on the foreign exchange market, and then from April last year also by increasing the interest rate on CB bills, as well as interest rates on other monetary instruments. This monetary setting is supported and strengthened by the several changes to the mandatory reserve instrument, aimed at the growth of savings in denars, as well as by systemic and macroprudential measures, such as the introduction of a countercyclical protective layer of the capital and thresholds for monitoring the quality of credit demand, which further strengthens the resilience of the banking system," the National Bank said on Wednesday. 

According to the central bank, it is necessary to further conduct prudent policies in order to stabilize inflation and inflation expectations on a more permanent basis. The annual inflation rate recorded a slowdown in April, which started from November last year, but it is still above the historical average, as is the case globally.

The slower growth of inflation, says the National Bank, mainly results from the lower price growth in terms of the food component. The latest expectations regarding movement in import prices, according to the central bank's assessment, point to a downward movement of the exchange prices of oil and food, which would have a favorable effect on domestic prices, but still, uncertainty is emphasized in the coming period, conditioned by the effects of the war in Ukraine.

Movement is stable on the foreign exchange market, with an increased tendency to save in domestic currency. The level of foreign exchange reserves at the end of April is adequate to maintain the stability of the domestic currency exchange rate.

Trade deficit in Q1 2023 is significantly lower than expected according to the October projection cycle. Achievements on the foreign exchange market are also favorable, i.e. slightly better since the beginning of the year, as of April, than the projected net inflows from private transfers, reads the press release among other.

Photo: MIA archive