Skopje, 17 April 2024 (MIA) - The National Bank’s Operational Monetary Policy Committee has decided that the interest rate on CB bills should remain unchanged at 6.3 percent, and the overnight and seven-day loan interest rates remain at 4.2 percent and 4.25 percent, respectively. The supply of CB bills at the regular auction remains unchanged and amounts to Mden 10 billion, the central bank said on Wednesday.

The Committee assessed that the current setup of the monetary policy is appropriate to the economic circumstances. The central bank notes that the latest decision on the monetary policy is based on the need to stabilize inflation expectations and inflation on a more permanent basis, while also taking risks into account.

According to the National Bank, the Committee decided that the maintenance of the current level of interest rates, together with the changes to the reserve requirement and the macroprudential measures taken so far, will contribute to further slowing down inflation and keeping the exchange rate stable. 

"Namely, as expected, inflation accelerated in March 2024 to 4 percent annually (3 percent in February), seeing that the guaranteed price measure was lifted for some food products and beverages and in terms of scrapping/reducing some import duties. However, the realization is below the projection of the National Bank, amid a significantly reduced pressure of food and energy prices, along with lower price pressures from less-variable categories. Prices of primary products on the stock exchange continue to adjust downward, except for oil, which sees certain fluctuations. Inflation performance since the beginning of the year is lower than expected, but the level is still above the historical average, and the risks regarding future price dynamics still exist. Hence, it was agreed that further caution is needed in the conduct of policies, including policies that affect demand in the economy," the central bank said.

The FX reserves by the end of March amount to EUR 4.3 billion, which is appropriate for maintenance of the stability of the domestic currency rate.

The trade deficit in the first two months of 2024, according to the latest available data, is slightly higher than expected with the October cycle of projections, and the achieved economic growth in the last quarter of 2023 and for the whole year, according to the National Bank, is below the projected, which points to a stronger slowdown in economic growth than expected.

In the monetary sector, according to initial data for March 2024, deposits are growing with a similar dynamic as in the previous month, but slightly stronger than expected. The credit activity of banks is also moderately slowing down, with a current annual growth slightly above projections for the first quarter.

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