National Bank of Moldova Raises Key Rate from 6.5% to 7.0%; Borrowing Costs Set to Increase

On Thursday, the Executive Committee of the National Bank of Moldova (NBM) raised its key policy rate from 6.5% to 7.0%. The overnight deposit rate was increased to 5.0%, the REPO rate to 7.25%, and the overnight lending rate to 9.0%. The reserve requirement ratio for funds attracted in Moldovan lei and non-convertible currencies was kept unchanged at 18%. For funds attracted in freely convertible currencies, the ratio remains at 26%. The National Bank said the decision was driven by rising inflationary risks. Inflationary pressure is coming both from the supply side, through higher prices for energy resources, food, and raw materials, and from domestic demand, which is being supported by growing household incomes, rupor.md reports. Annual inflation stood at 6.76% in May, remaining above the upper limit of the NBM’s target range around its medium-term inflation objective of 5%. According to the central bank’s forecast, inflation will continue to rise through the end of 2026 and is expected to begin declining in the first quarter of 2027. The NBM stated that the rate hike is intended to curb the growth of consumer prices, limit the secondary effects of price shocks, and encourage savings rather than consumption.