With relaxed monetary policy and all the decisions and measures taken since the outbreak of the corona crisis, the National Bank is making a substantial contribution to support financial stability and the Macedonian economy.
For the time being, the monetary policy stance is appropriate. However, there is a need for close monitoring of inflation movements, in particular inflation expectations and potential side effects in a context of wage growth. This was stated by National Bank Governor Anita Angelovska Bezhoska, who met with the team of the European Department at the International Monetary Fund (IMF), led by the Head of Mission Bergljot Barkbu. The meeting was held within the Annual Meetings of the World Bank Group and the IMF, the National Bank said in a press release on Friday. As the Governor pointed out at the meeting, the National Bank is closely monitoring the developments in the Macedonian economy. As the outlook remains uncertain, it is ready to respond to developments appropriately, within its competencies, and communicating this in a transparent manner.
The IMF, in its World Economic Outlook projections, expects inflation to reach 3.1 percent on average in 2021, but to come down in 2022 to around 2.2 percent. As emphasized at the meeting, the current price movements in North Macedonia are in line with global developments. The biggest driver of the recent increase in inflation has been global energy prices, mainly for oil and gas.
Furthermore, global supply chain disruptions and associated bottlenecks are putting pressure on durable goods inflation, particularly as demand has bounced back quickly. The effect of both higher energy prices and supply-demand mismatches are expected to dissipate in 2022.
Moreover, none of these factors would respond to changes in monetary policy. However, central banks, including the National Bank, will need to closely monitor developments to ensure that higher inflation expectations do not trigger sustained increases in wage inflation, reads the press release.
Source: MIA
