At the regular session held on 14 January, 2014, the NBRM's Operational Monetary Policy Committee reviewed the recent macroeconomic indicators and their potential impact on the monetary policy setup
Skopje, 15 January 2014
At the regular session held on 14 January, 2014, the NBRM's Operational Monetary Policy Committee reviewed the recent macroeconomic indicators and their potential impact on the monetary policy setup.
In 2014, the global economic activity on the international markets is expected to accelerate moderately, reaching a growth of 3.4%, compared with the growth rate of about 2.5% in 2013. The United States will have the primary role in accelerating the economic activity, and a growth is expected in the euro area, as well. However, high unemployment in the euro area and slow credit activity, in conditions of low inflation, suggest that in the future there is a room for further support of the economic recovery by the macroeconomic policy makers in the euro area.
The available high frequency indicators for the last quarter show that the Macedonian economy will continue to grow, probably with intensity similar to the third quarter. These assessments are largely based on the favorable developments in the construction, as well as the signals for recovery of the industrial activity. The assessments further show that the economic growth will not be strong enough to cause major imbalances in the economy.
The data on 2013 inflation show an average annual inflation of 2.8%, which fully coincides with the projections. However, given that in recent months inflationary pressures were lower than expected, with potential for further lower import price pressures than previously expected, there are downward risks about the inflation forecast for the period ahead.
Data on foreign reserves for the last quarter indicate a quarterly decrease, as expected with the projections of the balance of payments. Reserves adequacy indicators are still in the safe zone, indicating sufficient reserves to cope with any unforeseen shocks.
In the last month of the year, the foreign exchange market registered seasonal developments, allowing the National Bank to make a net-purchase of foreign currency.
In December, bank liquidity on the domestic financial markets reduced under the influence of autonomous factors, amid higher seasonal demand for cash ahead of the festive season. The turnover on the interbank deposit market was stable, with the high percentage of 7-day transactions indicating strong confidence among market participants.
According to the preliminary credit flow data, in December, the monthly credit growth further accelerated, and same as in the previous month, lending was largely targeted towards the corporate sector. Such dynamics of lending activity is faster than expected and suggests possible stabilization of the banks' risk perceptions and effects of the monetary easing. However, it takes time to assess the sustainability of these favorable credit market trends, amid still present risks. December data point to favorable movements in the banks' deposit base, which continues to increase intensively on a monthly basis.
Taking into account the latest macroeconomic and market indicators and in anticipation of the effects of the measures already taken in the previous period, at the session, the Operational Monetary Policy Committee decided to maintain the current monetary setup, and at the auction to offer CB bills at the amount that falls due (Denar 25,500 million), at an interest rate of 3.25%.
The National Bank will continue to closely monitor the future macroeconomic developments and the materialization of potential risks and will accordingly adjust its monetary policy.