National Bank of Moldova hikes refi rate to 6.5% as inflation gathers pace

CHISINAU. May 7 (Interfax) - The National Bank of Moldova decided on Thursday to hike its base rate or refinancing rate from 5% to 6.5% per annum due to accelerating inflation amid the Middle East crisis, which has fueled growth for energy prices, the NBM said in a press release.

"The National Bank made this decision due to the need to adjust monetary policy and moderate inflation in the context of the conflict in the Middle East, reflected in rising global prices for energy, food and raw materials," the NBM said.

It said "in these conditions the annual inflation rate in the subsequent months of 2026 will exceed the upper limit of the deviation corridor of plus or minus 1.5 percentage points from the annual inflation target of 5%."

The NBM also raised the overnight lending rate from 7% to 8.5% per annum, the REPO rate from 5.25% to 6.75% per annum and the overnight deposit rate from 3% to 4.5% per annum. It kept the reserve requirement ratios for attracted funds in the national currency and for funds attracted in foreign currency at 18% and 26%, respectively.

The NBM said annual inflation in the first quarter of 2026 remained within the target forecast. However, according to the updated forecast, annual inflation will reach the upper limit of the range in the second quarter of 2026 and then exceed it for the next three quarters. Inflation could return to the target forecast in the second quarter of 2027.

The NBM expects average annual inflation in 2026 and 2027 to be 7% and 5.8%, respectively, which is 2 and 1.3 percentage points higher than the previous forecast. The inflation forecast has been downgraded due to the expected high growth in international oil prices, higher global food prices, higher import inflation in 2026, accelerating fuel price growth due to the war in the Middle East, and higher-than-expected actual inflation in the first quarter of 2026.

The NBM held the refinancing rate at 5% at its meetings on February 5 and March 19 this year. Its next rate-setting meeting is scheduled for June 18.

At the start of last year the NBM had to hike the base rate from 3.6% to 6.5% in an effort to minimize the inflationary impact of rising energy prices. The NBM lowered the rate from 4.75% to 3.6% in several stages in 2024. It gradually lowered the rate to 5% in 2025, the biggest drop being 1 pp on December 11.