Moldova holds rate, balances risk of inflation vs deflation

    Moldova's central bank maintained its basic policy rate at 3.5 percent, along with its other main rates, saying monetary policy continues to be affected by the complex balance of the risk of inflation and the risk of deflation.
    The National Bank of Moldova, which last cut its rate by 100 basis points in April 2013, said the disinflationary pressure is arising from low aggregate demand and a depreciation of the currencies of its trading partners while the recovery of European economies and a sharp rise in food prices could offset this pressure.
    The bank said its board had approved the first inflation report of 2014, which will be presented on Feb. 6, in which it forecasts inflation in 2014 and 2015 within the central bank's target range of 5.0 percent, plus/minus 1.5 percentage points.
    Moldova's inflation rate rose to 5.2 percent in December, up from 4.9 percent, the central bank said, adding that inflation has remained within the bank's range for the last 23 months.
    Moldova's Gross Domestic Product grew by an annual 12.9 percent in the third quarter, up from a growth rate of 6.1 percent in the second quarter, mainly due to a significant increase in the value of agricultural products after a year of drought, which resulted in higher exports and a modest rise in imports.

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