The basic interest rate remains at the level of 2,5 percent

National Bank building
National Bank of the Republic of Northern Macedonia / Photo: MIA

The basic interest rate remains unchanged at the level of 2,5 percent, and the supply of treasury bills also remains unchanged and amounts to 10 billion denars, the National Bank informs today.

- When making this decision, several key factors were taken into account, first of all, the steps taken so far to normalize the monetary policy, as well as the latest movements in inflation and the foreign exchange market. The foreign exchange market has seen a significant stabilization in the last period, and the National Bank intervened by buying foreign currency. At the same time, the pressures from the energy crisis have decreased significantly, while the inflow of foreign currency on the foreign exchange market in this period is significantly higher than expected. At the same time, certain positive changes are visible in the foreign exchange market in relation to the demand for foreign currency by domestic natural persons, which indicates a gradual stabilization of the expectations and confidence of domestic entities, according to the National Bank.

At yesterday's session of the Committee for operational monetary policy the latest data on the domestic and global economy and the latest developments on the international and domestic financial markets were reviewed, and it was assessed that the risks for the overall macroeconomic context are still expressed and the main risk continues to be the uncertainty caused by global geopolitical tensions and their impact on prices and economic activity in a global framework.

The latest data on inflation show an average inflation of 10,9 percent in the period January - July, with three quarters of this growth being explained by rising food and energy prices.

- Hence, the dynamics of inflation is still mainly a reflection of factors on the supply side, i.e. the increase in the import prices of food and energy, including the domestic price of electricity, which is influenced by developments in the global energy market. However, given the long-term nature of these trends, such pressures quickly spill over to the prices of other products and services and further fuel inflationary expectations, which points to the need for prudent domestic policies. However, the monthly change in consumer prices shows a certain slowdown, and a large part of the monthly growth is also due to the adopted decision for changes in the regulated price of electricity. At the same time, the annual dynamics of basic inflation remained stable, the central bank points out.

The latest expectations on world markets, as the National Bank says, indicate a gradual easing of price pressures, i.e. expectations for food prices have been revised downwards, while oil prices are expected to stabilize at the end of the year, and then their reduction.

- However, the risks on the supply side, especially with regard to the future movements of energy and food prices, are still significantly expressed due to the military developments in Ukraine, so the uncertainty related to the transferred effects on domestic inflation remains high, the announcement says. . 

Foreign exchange reserves are maintained in a safe zone, and pthe trends in the activity in the domestic economy in the first quarter of 2,4 percent, as well as the estimates for further growth according to the high-frequency data for the period April - June are now in line with the latest expectations. During this period it is observed further, but slightly more moderate annual growth in industry, turnover in total trade and catering, while the activity in construction in the period April - May records a slowing down of the decline. The latest data show further growth in loans and deposits. 

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