On December 11, 2012 a regular meeting of the Operational Monetary Policy Committee was held, at which the discussions were focused on the data on the banking sector as of the third quarter of 2012, the latest trends in international and domestic financial markets, the macroeconomic developments in the domestic economy and the banking system liquidity.
Skopje, 12 December 2012
Press release of the NBRM
On December 11, 2012 a regular meeting of the Operational Monetary Policy Committee was held, at which the discussions were focused on the data on the banking sector as of the third quarter of 2012, the latest trends in international and domestic financial markets, the macroeconomic developments in the domestic economy and the banking system liquidity.
In terms of the developments in the banking sector, liquidity and solvency continue to be the most important pillar of stability and safety of the Macedonian banking system. At the beginning of the third quarter of 2012, the new methodology for determining capital adequacy started to be applied, which is fully based on the standardized approaches defined in the first pillar of the Basel Capital Accord.
Globally, it becomes certain that the Euro area will face a contraction of economic activity in the last quarter of 2012. December projections of the European Central Bank indicate expectations for gradual stabilization of the economic activity in the region and possible return to the positive zone in late 2013. The most significant challenge for the Euro area also in 2013 will be the resolution of the sovereign debt crisis. In the USA, market analysts assess that a political compromise to overcome the fiscal problems will be reached, which is expected to give way for the moderate economic recovery to continue in 2013.
As for the domestic financial markets, in November, a stable turnover on the interbank deposit market was registered, with a significant part of the inter-bank lending transactions being concluded in longer terms (7 days to 1 month). On the foreign exchange interbank market intensified activity was registered, and the turnover was higher than the 2012 average monthly turnover, so in such circumstances the National Bank intervened with the market makers.
Recent macroeconomic developments in the domestic economy, from the monetary point of view, are relatively favorable. In terms of individual key performance indicators relevant to monetary policy, recent data point to inflation slightly lower than expected. In October and November, the pace of inflation slowed significantly, indicating a reduction in inflationary pressures caused by the increase of import and regulated prices. Despite the expectations of higher seasonal pressures on the demand for foreign exchange in the last quarter, NBRM purchased foreign exchange on the foreign exchange market. Recent changes in foreign reserves show that the balance of payments position is stable, with the financing of the current account being provided mainly from the net inflows in the capital and financial account. At the same time, the latest achievements of the government show that despite the announced larger budget deficit, so far there have been no pressures on foreign reserves through this source. Foreign reserves continue to be maintained at an adequate level. Economic activity indicators confirm that in the third quarter the situation in the real sector would be better compared to the second quarter, but it would still be maintained in the zone of negative annual change. The situation on the banks' credit market, where banks' lending activity slows down, supports this conclusion. If this trend of relatively favorable developments, primarily in inflation and foreign reserves, continues, it will act toward creating conditions for possible changes in the monetary policy stance.
Despite such developments, the still present uncertainty and the constant deterioration of the estimates for global growth continue to pose a risk to future trends in the external sector. At the same time, taking into account the volatility of prices on the world markets, as well as the uncertainty about the strength of their further transmission effects, the risks about the future path of inflation are still present. The presence of these risks, of course, imposes a need for caution in conducting the monetary policy.
On the basis of the latest macroeconomic and financial indicators, the Operational Monetary Policy Committee concluded that the monetary policy creates conditions for a stable macroeconomic environment in the domestic economy. In such circumstances, it was decided to keep the maximum interest rate on the key instrument at the unchanged level of 3.75% and to offer CB bills in the amount of Denar 26,000 million at the auction.
Governor's Office