The latest developments in the Macedonian economy suggests major changes in environment for conducting monetary policy than previously estimated. The annual growth of inflation continued to decelerate and in August was 2.8 percent.
Indicators of economic activity point to GDP growth in the second quarter, conditioned by the growth of industrial and construction activity, although somewhat at more moderate pace than the previous quarter.
According to preliminary data for August credit flows had monthly stagnation of lending activity, the decline in credit to the corporate sector and the further growth of the credit support of the private individuals.
It is estimated that the risks around the projection of the loans remain mostly downward, in circumstances where the slow and uncertain economic recovery creates greater restraint on bank lending.
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Negative effect on credit growth and conservative strategies have some banking groups with their daughters-company who are present in the domestic market. Monthly growth of deposits in the banking system accelerated in August, but still deposit potential increases at a slower pace than expected.
As stated in the press release, the liquidity of the banking system in the country in August increased under the influence of autonomous factors, mostly due to realized foreign exchange interventions.
In line with seasonal trends, but also influenced by the positive economic trends in the third quarter of 2013, the foreign exchange market was increased supply of foreign currency, as conditions improve foreign exchange positions of banks, interventions aimed at the purchase of foreign currency by the National Bank and further accumulation of foreign exchange reserves.
To overcome the liquidity fluctuations, banks actively used monetary instruments and market deposits, interbank transactions were with maturity up to 1 month.
In September 2013 came into force last changes in instrument “reserve requirements” issued by the National Bank providing further support the growth of savings in domestic currency and stimulate the inflow of foreign capital into the domestic economy, as an additional source of funding for the banking systems.
These changes represent a continuation of the measures taken by the National Bank such as Instrument “reserve requirement” for loosening of monetary conditions and creating space to increase credit support to the private sector.
Taking into account the latest economic and market indicators, the session of the Committee on operational monetary policy was decided that the interest rate on the underlying instrument, treasury bills, is set at an appropriate level. Consequently, it remained 3.25 percent, and the auction is decided to offer treasury bills at the due amount (25,500 million).
– Bank will continue to closely monitor future macroeconomic developments and the possible realization of risks and accordingly, to adjust monetary policy, said in a statement.
