National Bank of Moldova tightens policy amid inflation
The National Bank of Moldova (NBM) raised its key base rate by 0.5 percentage points to 7.5% on August 6, continuing its monetary tightening cycle to curb inflation and anchor consumer prices near its 5% target.
The decision also adjusted interest rates across central bank facilities. The overnight credit rate rose to 9.5% annually, repo operations were set at 7.75%, and the overnight deposit rate increased to 5.5%.
Mandatory reserve requirements remained unchanged at 18% for funds raised in Moldovan lei and non-convertible currencies, and 26% for freely convertible currencies.
Monetary transmission and market impact
By raising the policy rate, the central bank increases borrowing costs for commercial institutions. This move aims to cool consumer spending and moderate price surges, while making savings deposits more appealing to the public.
NBM officials noted that sustained tightening is essential throughout the year to bring annual inflation back within the official target corridor of 5% (±1.5 percentage points).
Inflation outlook and regional risks
Annual inflation reached 6.68% in the second quarter, largely driven by rising fuel and transport costs stemming from Middle East instability.
According to the central bank's latest forecast, annual inflation will continue rising through late 2026 before entering a downward trajectory. The NBM projects inflation will return to its target corridor by the second quarter of 2027.
However, risks to the outlook remain high due to escalating geopolitical tensions, energy price volatility, extreme weather, the ongoing war in Ukraine, and potential regulated tariff adjustments.
This latest move follows previous policy rate increases in May, when the rate was hiked to 6.5%, and in June, when it reached 7%.
Translation by Iurie Tataru
