The credit rating agency Standard & Poor’s has affirmed Macedonia’s credit rating at BB- with a stable outlook, indicating that the banking sector is stable, and inflation in the medium term will stabilize and move around historical levels.
The report states that, before the conflict in the Middle East and the rise in world energy prices, inflation had been significantly decreasing and was 2.9% in February. Inflation is expected to increase in the coming months, but in the medium term, inflation in food and services would normalize, with overall inflation ranging from 2.0% to 2.5%, on average.
In such conditions, it is assessed that the National Bank will conduct a cautious monetary policy, based on data for the near term, with priority given to price stability and the stability of the denar exchange rate. It is indicated that the eventual easing of monetary policy would be gradual and would depend on a sustained reduction in inflation, while increased inflationary or external pressures would lead to the retention or tightening of the policy. In addition, it is stated that the National Bank has adjusted the operational framework of monetary policy in order to improve liquidity management and strengthen the transmission of monetary policy.
Regarding the banking sector, it’s stated that it remains stable, with a high capital adequacy ratio (19.5%), as well as solid growth in deposits and credit activity.
