Skopje, 25 October 2022

"The tightening of the monetary policy should be adjusted to the conditions in the economy and in practice gradual tightening is more common. Progressive tightening is more predictable for the banks, which are expected to monitor the signals and gradually adjust deposit interest rates. The National Bank applies gradual increase in the interest rate,  which in the past months points to inflationary risks, taking measures accordingly, while looking upon the economy, as well", said the Chief Economist of the National Bank, Aneta Krstevska, in an interview for the "Vecer" newspaper. 

"In addition to the increase in the policy rate, the National Bank took other measures that also affect the banking system and the economy (changes in the reserve requirement rates, namely the reduction of the allocation of the reserve requirement for denar liabilities and the increase in the allocation for foreign currency liabilities of banks ). Let us emphasize that the measure for releasing banks from the reserve requirement  for the newly approved green finance loans, encourages both lending and transformation of the economy towards greater use of renewable energy sources, which is crucial in this crisis period", Krstevska said.  

Krstevska stressed that in the current circumstances related to inflation, it is especially important to stabilize expectations, that is, to provide conditions enabling the economic agents to set real prices of product - prices that are a real reflection of the current costs. The stabilization of the consumer inflation expectations, on the other hand, should limit the additiional demand and building stoks, which can also fuel inflation.

"For these reasons, central banks worldwide find needful to contribute to the stabilization of inflation expectations, as a necessary precondition for reining in inflation." The monetary tightening sends a message for limiting any pressures on prices from the demand side and contributes towards creating an environment in which economic entities behave rationally, and not according to perceptions and "heated" expectations. It seems that at the moment central banks and international financial institutions are united in the fight against inflation as the biggest global problem, the growth prospects depend on. Namely, let's not forget that the price stability is the best environment for investments and economic growth", Krstevska said.

Krstevska stressed that although it is difficult to talk about the further inflation movements in these extremely uncertain global circumstances, the fact that the global inflation forecasts from all international institutions point to its slowing down during 2023 remains significant for the future path of inflation. It is supported by the strengthened efforts throughout the European economies, but also the region, for the transformation of the energy sector and the transition to renewable energy sources, as well as the monetary measures already taken around the world to curb inflation and inflationary expectations, says Krstevska.