Moldova’s central bank, the BNM, cut the refinancing rate by 1pp to 4.5% on March 4, citing disinflation risks posed by the global Covid-19 coronavirus outbreak.
The decision to ease monetary policy is oriented towards supporting the aggregate demand that, within the transmission mechanism limits, will be passed through more channels, including the lending channel, BNM explained. Extraordinary board meetings to address unexpected developments were announced as possible.
Last December, BNM slashed the monetary policy rate by 2pp in an unexpected move broadly seen as aimed at helping the government with lower borrowing costs and slightly stronger economic growth rates.
The headline inflation was still 6.9% in January, but the BNM expects it to return within the 5%+/-1.5pp target band in Q2 and drop to 3% by the end of the year, according to the quarterly inflation report issued in early February.
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