The NBM Raises Its Base Rate to 7.5% Per Year: Loans to Become Less Affordable

The Executive Committee of the National Bank of Moldova (NBM) has decided to continue pursuing a tight monetary policy. Loans will become more expensive due to an increase in the base rate. The base rate for key short-term monetary policy operations has been raised by 0.5 percentage points to 7.5% per annum, according to bani.md At the same time, the interest rate on overnight loans has been set at 9.5% per annum, on repo transactions at 7.75% per annum, and on overnight deposits at 5.5% per annum. Reserve requirements for deposits have been maintained at their previous levels: 18.0% for deposits in Moldovan lei and non-convertible currencies, and 26.0% for deposits in freely convertible currencies. The NBM made this decision against the backdrop of an expected acceleration in inflation this year. Continuing the restrictive monetary policy is necessary to achieve the regulator’s primary objective – bringing inflation back to and keeping it within ±1.5 percentage points of the medium-term target of 5.0%. The current medium-term inflation forecast generally confirms the conclusions of previous forecasts. Annual inflation is expected to continue rising through the end of this year, after which it will begin to decline, returning to the target range in the second quarter of 2027 and remaining within that range through the end of the forecast period. By raising the base rate, the NBM is strengthening its anti-inflationary stance and gradually adjusting its monetary policy instruments. At the same time, the central bank continues to monitor the response of the real and financial sectors of the economy to the decisions it makes. In June 2026, annual inflation stood at 6.51%, which was 0.25 percentage points lower than the May figure. Thus, inflation was practically at the upper limit of the target range relative to the medium-term target of 5.0%. At the end of the second quarter of 2026, the average annual inflation rate reached 6.68%. The increase was driven by higher prices for fuel and transportation services amid the conflict in the Middle East. The figure was only slightly higher than the forecast presented in the May Inflation Report. Among the external risks to inflation, the NBM highlights a possible escalation of the conflict in the Middle East, which could affect global oil and gas prices; an increase in the frequency of prolonged periods of extreme heat; the war in Ukraine; the fragmentation of global trade; and intensifying external inflationary pressures. Domestic sources of uncertainty include the timing and scale of adjustments to regulated service rates, uncertainty regarding this year’s harvest and the dependence of domestic fruit and vegetable prices on weather conditions, the volume of external financing, fiscal stimulus, as well as the consequences of implementing new tax policies and reforming the public sector’s wage system.