The central bank of North Macedonia (NBRSM) lowered the coupon on its bills, which serves as its benchmark interest rate, to 2.25% from 2.50% at the latest 28-day bill auction on Mar 13, according to an official press release. The central bank sold MKD 25bn worth of 28-day bills, which was in line with its target. The central bank cited the latest macroeconomic data, which show favorable movements on the foreign exchange market, lack of external sector pressures and lack of serious inflationary pressures, as main reasons for the monetary policy easing. It also said that economic growth and confidence among domestic entities was improving. The central bank added that the next auction of its 28-day bills will take place on Apr 10.
The central bank reduced the key interest rate by other 25bps to 2.50% in mid-December. The continuing easing of the monetary policy suggests that the situation in the country is stabilizing and the central bank likely aims to encourage stronger investment activity in the real economy. Still, the central bank is unlikely to decrease the key interest rate rapidly but could further lower it in upcoming auctions if the political and economic situation in the country remains stable. We note that the economy expanded by 3.7% in Q4 and the growth rate was the strongest since Q4’15.