Inflation: why it appears and what tools the state has to maintain price stability
Automatically translated summary. The full text is available in Romanian.
An informative note prepared under the National Financial Education Campaign, implemented by the National Bank of Moldova and Expert-Grup, explains what inflation is, how it is measured in Moldova, what causes it and how the central bank works to keep prices stable.
The National Bureau of Statistics tracks around 1300 goods and services monthly; the CPI derived from this basket yields the inflation rate. A falling rate does not mean falling prices, only slower growth. Inflation stems from demand, rising costs and inflationary expectations.
The National Bank of Moldova aims to keep inflation at 5.0% a year, with a deviation of ±1.5 percentage points. Its main tool is the base rate, which influences all loan and deposit rates. It also uses the minimum reserve requirement, money market operations, standing facilities and foreign exchange interventions. Excessive inflation erodes purchasing power, distorts spending and investment decisions and lowers investment returns. Inflation that is too low is also harmful: deflation can cut spending, trigger layoffs and wage cuts, and lead to economic decline.
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