OREANDA-NEWS. August 14, 2009. National Bank’s Administrative Board had decided at the end of the last week to cut the basic rate on major monetary policy operations by 1 percentage points – to 7 from 8 per cent.

The National Bank’s Administrative Board also decided to cut the rate on overnight credits and long-term credits also by 1 percentage points – to 9.5 from 10.5 per cent and to 7 per cent from 8 per cent, respectively. At the same time, to increase liquidity in Moldova’s banking system, reduction of the obligatory reservation norms in MDL by 4 percentage points to 10 from 14 per cent and in foreign currency – by 2 percentage points – to 12 from 14 per cent was approved.

This decision of the National Bank will become effective on August 21. According to the National Bank of Moldova, the further liberalization of the monetary policy carried out by the National Bank resulted from the continuing inflation rate reduction tendency. Since the beginning of 2009, the 2.4 per cent deflation rate has been registered while for the last 12 months deflation has amounted to 0.5 per cent.

The decision taken by the National Bank enables to increase commercial banks’ liquidity by about 480 million leis, US11.4 million and 12.6 million euros. According to the National Bank, the decisions taken will contribute to the further reduction in interest rates on credits and deposits. The excessive liquidity in the country’s bank system will increase to about 2 billion leis (US178.6 million), resulting along with the cut of the basic rate in the further cut of interest rates and in growing possibilities of real sector crediting, the National Bank says.