National Bank further ups interest rate to 4.25 percent
Skopje, 16 November 2022 (MIA) – The interest rate of central bank bills is increased by 0.75 percent and now stands at 4.25 percent, the National Bank’s Operational Monetary Policy Committee has decided.
The Committee also decided to raise the overnight and seven-day loan interest rates by 0.75 percent, the National Bank said on Wednesday. The central bank notes that its Council has also made a decision to change the mandatory reserve rates of the banks, in order to further stimulate savings in domestic currency. “The amendment to this instrument, which is the fourth in a row this year, includes an increase in the mandatory reserve rate of banks for liabilities in foreign currency from 18 to 19 percent. The part of the mandatory reserve in foreign currency that banks meet in euros has also increased, from 75 percent to 77 percent, which strengthens the effect of the change in this instrument. It is expected that the measure will strengthen the initiated changes in the banks' interest policy and the banks will offer more favorable interest rates for all categories of denar deposits, contributing to a stronger growth of savings in domestic currency. At the same time, this change would contribute to optimal liquidity management,” says the National Bank. The changes maintain the continuity of tightening the monetary policy using a wider set of monetary instruments, which started at the end of last year, in order to maintain the stability of the exchange rate and medium-term price stability. “Changes in the policy setting of the National Bank are a reaction to increased price pressures. Inflation has accelerated in recent months, for which the growth of food prices has the largest and growing contribution. This highlights the impact of imported food and energy price pressures on domestic inflation, on which monetary policy has no direct influence. However, given the spillover effects and the rise in inflation expectations, these shifts in inflation necessitate a monetary response,” the National Bank said. According to the central bank, it is extremely important to conduct prudent domestic policies and carefully manage domestic demand. Current achievements and assessments of import prices show upward inflationary trends, the press release reads. The domestic foreign exchange market is stable, and in terms of activity in the domestic economy, the National Bank notes that available data point to a slowdown in real economic growth.
