Skopje, 27th October 2021
The denar is stable, while the price movements are due to the rise in energy prices on world stock markets after the severe drop last year, as well as temporary disruptions in supply chains caused by the pandemic. These changes are temporary and would subside next year, so there is no need to "heat up" the inflation movements , said Emilija Nacevska, Vice Governor of the National Bank, as a guest on the TV show "Morning Briefing".
- The reason for the faster price growth in the first nine months of this year of 2.8%, compared to the expectations for an increase of 2.2% for the whole year, are on the supply side. This is primarily due to the higher growth of energy prices globally – the oil and gas prices, which comes after the large fall in prices last year and the disruption of global supply chains as a result of the pandemic. With the recovery of global economic activity, there is a faster growth of demand relative to supply and the creation of supply bottlenecks that make price pressures. According to the assessments of the International Monetary Fund, the European Central Bank and other international organizations that follow these movements this situation is temporary and it is expected that it will be overcome during 2022. We are a country the energy and raw materials of which depend on imports, and the movements on world stock markets reflect on domestic prices - the prices of food and other products. That is where this price increase comes from - said Vice Governor Nacevska.
However, the Vice Governor emphasized that the additional inflationary fomenting and its groundless incorporation in prices by domestic economic agents can lead to an increase in inflation, which is not necessary, nor based on objective economic parameters.
- There is no room for panic for an inflation, but we should act responsibly and we should not unreasonably create price pressures where there is no need, because it will affect the entire economy. To foment inflation expectations is something that can lead to price growth. In such a scenario, the central bank reacts through monetary policy, including interest rate growth, which is still not desirable in conditions when there are no imbalances, and the economy still needs support to recover from the pandemic - said Nacevska.
Nacevska stressed that both the condition and the readiness of the National Bank are proof for the capacity to attain the main goals, which is confirmed with the unhindered maintenance of the macroeconomic stability in the past 26 years.
It is also thanks to the capacity of foreign reserves, which we have built over the years. The level of foreign reserves is adequate, with coverage of future imports of about five months. We monitor the developments on the foreign exchange market on a daily basis, and let me say that in the third quarter on the foreign exchange market we purchased a surplus of foreign currency. The denar is stable and will remain stable, and external factors and developments do not affect the stability of the exchange rate - said the Vice Governor.
During her appearance on the TV show, the Vice Governor Nacevska emphasized that in order to maintain price and financial stability, the independence of the National Bank is of great importance, which is mentioned in all reports of the European Commission.