Moldova's central bank has raised its key refinancing rate by 2.5 percentage points to 18.5 percent and altered commercial bank reserve requirements to help battle inflation in the ex-Soviet state.
A statement appearing at the weekend on the central bank's website announced the change in the refinancing rate effective from last Friday.

It said bank reserve requirements were being raised in increments -- from 16 percent to 20 percent as of June 21, 21 percent from July 6 and 22 percent from July 21.

An International Monetary Fund mission visiting Chisinau this month said inflation was the most serious issue facing Moldova. Prices rose 1.6 percent month-on-month in April, with year-on-year inflation at 16.2 percent.

Prices were 5.8 percent higher this year to end-April, compared to a forecast for all of 2008 of 10 percent.
The IMF said it was unrealistic for Moldova to reduce inflation to below 10 percent over the course of 2008, but that it expected inflation to slow in the second half of the year.

The central bank said the main factor behind inflation was last year's drought, which pushed up food prices significantly. (Editing by Catherine Evans)