Moldova holds rate, raises reserve requirement 250 bps

      Moldova's central bank left its base rate steady at 6.50 percent but raised the reserve requirement for funds in domestic leu by 250 basis points to 42.50 percent to sterilize excess liquidity.
      The National Bank of Moldova (NBM), which has maintained its rate since cutting it in December last year, added the reserve requirement for funds in freely convertible currencies will be unchanged at 14.0 percent.
      Moldova's inflation rate eased to 3.0 percent in July from 3.2 percent in June and the central bank said the risk to its forecast stems from food prices that showed larger changes than expected.
     At the same time, prices for regulated goods and services, core inflation and fuel prices are in line with the forecast from August, NBM added.
      In August NBM forecast inflation would decline to below its target range of 3.5 to 6.5 percent (around a 5.0 percent midpoint) over the next three quarters to 1.9 percent by the fourth quarter of this year as regulated prices fall.
      From then on the inflation trajectory will reverse and return to its target range by the second quarter of 2019 and hit 6.5 percent in the third quarter of 2019. In the second half of next year the rise in regulated prices will exceed 10 percent.
     Moldava's leu has risen slightly this year despite the strength of the U.S. dollar and was trading at 16.7 to the dollar today, up 2.4 percent this year.

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