Today, the National Bank of the Republic of Macedonia Council held its fifth session.
At the session, the Council discussed the latest Quarterly Report, including the macroeconomic projections by the end of 2016. In the first quarter of 2015 the National Bank kept its key interest rate unchanged at the level of 3.25%, and the current monetary easing was assessed as sufficient. This stance regarding the key interest rate was supported by the decline of the total and core inflation on an annual basis, the retention of previously initiated positive trends in the economic activity also in 2015, as well as the lending activity which has registered faster growth than previously projected. However, foreign reserves declined on a quarterly basis, which is mostly due to the early repayment of a loan from the precautionary credit line to the IMF. The global environment has not undergone major changes compared to the period of the last assessments.Despite the moderate recovery of foreign demand, the estimated growth of the domestic economy continues to point to solid performances and expectations about the future. Data indicate GDP growth of 3.8% in 2014, while in 2015 and in 2016, growth of 4.1% and 4.5%, respectively, is expected. The solid credit growth is expected to continue and reach 9% in 2015 and 10% in 2016. Reflecting price movements in the first quarter of the year, and the expected containment of the negative contribution of energy prices to overall inflation by the end of the year, in 2015 growth in prices of 0.5% is expected. Recent assessments of the balance of payments indicate current account deficit of 1.6% for 2015, which will widen to 3.1% in 2016. This increase is primarily due to the expectations for the entry of new foreign investments in the export-oriented sector which would reflect on the investment imports.
In general, recent performances point to maintaining of an economic image similar to that in the October projections, with estimates for solid economic and credit growth, absence of price pressures and balance of payments position which provides further maintenance of the foreign reserves at an adequate level. Risks to the realization of this macroeconomic scenario result from the international environment, primarily from possible changes in the pace of recovery of the global economic growth and the growth in the European Union, as well as the uncertainty related to the domestic political events. The National Bank will continue to closely monitor the developments in the period ahead, and if necessary it will make appropriate adjustments to the monetary policy conduct aimed at successful achievement of its goals. At today's session, the Council also adopted the Strategic Plan of the National Bank of the Republic of Macedonia for the period 2016-2018.
The commitment to keeping low and stable inflation through the strategy of maintaining a stable exchange rate of the denar against the euro, maintaining the financial stability as an integral element of macroeconomic stability and a prerequisite for achieving economic growth and prosperity, will be the major pillar of the activities of the National Bank.
In this regard, the National Bank will continue to develop and improve the activities in the field of monetary policy and financial markets support, foreign reserves management, maintenance of financial stability, issuance and management of banknotes and coins, payment systems, statistics and research. Also, the National Bank will continue to develop the corporate governance and deepen the system of values, will support the building of a modern and competent human capital, the establishment of the latest technological innovations in business processes and the development of cooperation with domestic and foreign institutions.
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