The central bank of North Macedonia reduced its key interest rate once more in December, prompted by favorable inflation trends and stable foreign exchange market conditions. The Executive Board of the National Bank of the Republic of North Macedonia announced on its website on Thursday that the interest rate on CB bills has been cut by 25 basis points to 5.55 percent, effective from the meeting held on December 17. This marks the third consecutive reduction in the policy rate.
Additionally, the board lowered the deposit facility rate for overnight and 7-day tenures by the same margin, setting them at 3.95 percent and 4 percent, respectively.
The bank maintained the supply of CB bills offered at the regular auction at MKD 10 billion.
In their statement, the bank noted that, "The recent favorable economic conditions warrant a gradual normalization of the monetary policy framework."
They added, "Adjusting interest rates demonstrates a cautious approach in our monetary policy, factoring in both persistent external risks and domestic influences on aggregate demand."
In October, the central bank implemented a similar reduction in the key interest rate by a quarter-point. Headline inflation rose to 4.3 percent in November, up from 3.5 percent in October, primarily driven by increased food prices due to the base effect. In contrast, core inflation is on a downward trend.
The bank projects an average inflation rate of 3.5 percent for the current year.
The economy expanded by 3 percent in the third quarter, aligning closely with the central bank's expectations.
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