The National Bank of the Republic of Macedonia (NBRM) decided to reduce the policy rate (the interest rate achieved at the bills auctions) by 25bps to 2.50%, according to a press release from Wednesday. The central bank sold MKD25bn worth of 28-day bills, which was in line with its target (next tender to take place on Jan 16). The Bank explains that the rate cut is in line with the continuous favorable movements on the forex market, which indicate a solid external position and stable expectations. It also says that changes in the deposit base of banks are favorable too. Thus, the Monetary Policy Committee confirmed previous assessment that the economic fundamentals are solid and there are no imbalances. All in all, the NBRM assessed that the current economic conditions are more favorable than before so it decided that there is a room for further monetary easing. Recall that the NBRM reduced the rate by other 25bps to 2.75% in the middle of August.
The NBRM said that GDP growth in Q3 came in at 3.0%, slightly higher expected and the still limited number of available indicators for Q4 hint of further economic growth. Inflation remained at 1.5% in Jan-Nov, in line with expectations and the NBRM says that risks for not meeting the forecast of 1.6% for 2018 are rather low. Latest data on forex reserves, foreign trade data as well as credits and deposits are in line with expectations, the release also reveals. NBRM informs it has purchased EUR17.6m of forex in November and EUR4.8m in the first ten days of December as well as EUR319.7m YTD by Nov 10, which is the highest purchase in the last ten years.