Interest rate policy in the Republic of Macedonia and its influence on financial stability and economic growth
Interest rate policy in the Republic of Macedonia and its influence on financial stability and economic growth

Summary/Abstract: The interest rate policy is an instrument of the monetary credit policy in achieving of determined goals. Its task is to ensure efficient allocation of financial resources and achieving an internal and external stability of the economy, and thus to directly contribute to stimulating the development and improvement of living standard. The National bank of the Republic of Macedonia, through regulating of the spectrum of interest rates, influenced on keeping the nominal exchange rate of MKD (Denar) to a target level, and realization of price stability in the economy. This way, the bank sent signals to all commercial banks to adjust the interest rates level. The commercial banks in the Republic of Macedonia conceive and run their own interest rate policy, in accordance to the effectuated level of economic activity, the level of liquidity, the inflation rate, the course of monetary policy, competition, risks and the high level of indirect and operation costs.In recent years, the rigid bank interest rate policy gradually relaxed. However, yet the limited level of domestic saving from one side, and high demand for investment funds and inadequate quality of the banks` credit portfolio, on the other side, in the following period, will determine the establishment of relatively higher bank interest rates in the Republic of Macedonia, that adversely reflects on acceleration of the economic growth.

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