North Macedonia’s central bank affirms key rate at 1.25%

North Macedonia’s central bank affirms key rate at 1.25%
North Macedonia’s central bank affirms key rate at 1.25% / bne IntelliNews
By bne IntelliNews July 15, 2021

North Macedonia’s central bank kept its key rate at the same level of 1.25% on July 14, as it assessed it appropriate for the current economic and financial conditions.

The last time the key rate, which is also the rate for central bank (CB) bills, was cut was on March 10 by 0.25 pp.

The country’s economy declined by a real 1.9% year on year in the first quarter of 2021, during the third wave of the COVID-19 pandemic, which negatively affected the economic recovery.

“The available data for the period April-May point out to strong annual growth of the economy in the second quarter, primarily due to the low comparison base, which is related to the strict measures imposed to prevent the spread of COVID-19 last year and partly due to the stabilization of the epidemiological situation and vaccination process,” the central bank said.

Strong economic growth is expected in the industrial production, trade sales and catering sector.

In terms of inflation, the average annual growth of consumer prices in the first half of 2021 was 2.4% and is close to the April projection.

Regarding the expected movements in import prices, the latest revisions are in upward direction. Thereby, the uncertainty regarding the movement of the world prices of primary products in the next period is still present in addition to the uncertain economic effects related to the pandemic and the prospects for dealing with it.

Meanwhile, North Macedonia sold MKD10bn (€162.3mn) of 28-day CB bills on July 14 with an interest rate of 1.25%.

The next auction of CB bills is due to be held on August 11.