Skopje, 20 October 2022

"The stance of the central banks’ monetary policies in the forthcoming period is clear.  Yet, it should be born in mind that the dynamics of tightening of the policy rate depends on the specifics of the economy itself.  The central banks are challenged to act in direction of dealing with inflation and anchoring the inflation expectations, while at the same time they should consider limiting the adverse effects on both, economy and financial stability.  In times of high uncertainty, shocks caused by supply and worrying economic prospects, data-based gradual approach and decision making are preferred”.  This was pointed out by the Vice Governor Ana Mitreska in her address at this years “Erste Investors’ Breakfast” of bankers and investors.

Mitreska said that central banks deal with specific circumstances. Price pressures predominantly come from the supply side, while risks to the economic recovery are serious.  However, the inflation took longer and has broader scope, which encouraged almost all central banks to start tightening the monetary policy. 

Speaking of our economy, Mitreska pointed out that the unstable environment and energy crisis created pressures on inflation but also on the foreign exchange market.   In such circumstances, since the end of 2021, the National Bank began the normalization of the monetary policy by withdrawing liquidity with foreign currency interventions.   Since April, our central bank also began with the gradual increase of the policy rate.  With upward corrections on several occasions, the policy rate increased by 2.25 percentage points cumulatively.  The tightening of the policy rate was supplemented with measures for changes in the reserve requirement system, in order to encourage denarization, as well as investments in renewable energy sources. 

Regarding the financial stability, she pointed out that it has been preserved, despite the uncertainty caused by the crisis and risks for spillover of problems from the real to the financial sector.  The banking sector is stable, and the non-performing loans are at a low level and continue to decline.  Solvency, which is a main indicator of the banks’ ability to absorb shocks, remains high.  The stress tests for 2022 and 2023 confirm the overall resilience of the banking system to macroeconomic shocks.  However, precaution and vigilant monitoring of the situation is needed.