North Macedonia's central bank, the NBRM, decided on March 12 to keep its monetary policy rate at 6.3% (chart).

Given the favourable foreign exchange market conditions, the decision to maintain the current rate primarily focused on the imperative of stabilising inflation at historically low levels and establishing more enduring inflation expectations.

Additionally, the central bank said that the rates for overnight deposits (4.2%) and seven-day deposits (4.25%) remain unchanged.

Simultaneously, by the end of February, adjustments were approved in the structure and approach to upholding the mandatory reserve. This decision encompasses a series of comprehensive measures, gradually implemented, with a predominant focus starting from June 2024. 

In February 2024, domestic inflation decelerated to an annual rate of 3%, marked by decreased pressures from food and energy prices, as well as less volatile categories, aligning with implemented monetary measures.

Consumer polls also indicate favourable signals, with expectations leaning towards a price reduction in the upcoming period.

The economic growth achieved in the last quarter of 2023 and the entire year falls below projections, indicating a more pronounced slowdown than anticipated. The domestic economy's real growth for 2023 is 1%, with a fourth-quarter GDP growth of 0.9% annually. Net exports and personal consumption contributed to the growth, while public consumption played a moderate role.

Gross investment faces a significant real decline, influenced by last year's high comparative base and reduced inventories of raw materials and energy. Limited high-frequency data for Q1 2024 reveals solid industrial production growth in January but a real decline in total trade turnover. Risks for future growth persist, primarily tied to external developments and the realisation pace of domestic infrastructure projects.

Meanwhile, the finance ministry sold MKD10bn (€162.1mn) of 35-day central bank bills on March 13 with an interest rate of 6.3%.

The next auction will be held on April 17.