North Macedonia's central bank, the NBRM, said on January 31 that it decided to keep its policy rate unchanged at 6.3% (chart), based on the need to stabilise inflation expectations and ensure a more enduring control over inflation.

Additionally, the central bank said that the rates for overnight deposits (4.2%) and seven-day deposits (4.25%) remain unchanged.

The year-on-year domestic inflation for December 2023 stood at 3.6%, characterised by a notable decrease in pressure from both food and energy prices.

Additionally, there were diminished price pressures from less volatile categories, aligning with the implemented monetary measures. Notably, the disparity in annual rates between North Macedonia and the Eurozone was minimal, reflecting similar inflation trends.

In the third quarter of 2023, the real GDP growth registers at 1.2% on an annual basis, consistent with the projections outlined in the October cycle (indicating a growth rate of 1.1%).

The high-frequency data spanning October to November 2023 currently align with expectations for an upturn in economic activity during the final quarter of the year.

During this period, there was a notable upswing in real growth across industrial production, total trade turnover and construction, rebounding from the previous quarter's decline. Concurrently, a heightened annual growth rate was observed in the real turnover within the catering sector.

Despite these positive indicators, the predominant risks to future growth are tilted towards the downside, predominantly linked to escalating geopolitical tensions.

Meanwhile, the finance ministry sold MKD10bn (€162.6mn) of 42-day central bank bills on January 31 with an interest rate of 6.3%.

The next auction will be held on March 13.