The National Bank of Moldova increased the base rate from 5% to 6.5%. NM explains how this will affect loans and prices, and why the regulator’s decision was criticized.
What about the base rate?
The National Bank of Moldova increased the base rate from 5% to 6.5%. Also, rates on overnight loans increased by 1.5% to 8.5% and on deposits to 4.5%. At the same time, the rate of reserves in lei and foreign currency remained at the same level – 18% and 26%, respectively.
The regulator explained its decision by the need to mitigate inflationary pressure due to the consequences of the conflict in the Middle East: rising world prices for energy resources, food and raw materials, as well as the impact on the forecast of regional economic activity and on the monetary and fiscal policies of the world’s leading economies.
In addition, the National Bank revised the inflation forecast for this year, raising it from 5% to 7%, and for next year – from 4.5% to 5.8%.
It should be noted that the inflation corridor established by the National Bank is 5% ±1.5%. In March this year, annual inflation was 5.81%, which is 0.75% higher than in February, and in the first quarter, annual inflation was 5.24%.
The National Bank considers the main inflation risks to be the conflict in the Middle East, the war in Ukraine, rising world food prices due to bad weather conditions, rising prices for fertilizers, as well as possible adjustments in utility tariffs.
Will loan rates rise?
So far, the National Bank has recorded a decrease in interest rates on new loans. The average loan rate is 9.06%, and the weighted average deposit rate increased to 5.11%.
For the Prima Casa preferential mortgage loan, we note that the interest rate is calculated as the average rate on new attracted deposits for a period of six to 12 months. Now this figure is 5.57%. However, in January – February it was 5.79%, and in March – 5.61%.
IDIS Viitorul economic expert Veaceslav Ionita noted that after the increase in the base rate, government loans will become more expensive. “When the base rate rises, commercial banks immediately raise their rates. The relationship here is approximately this: if the rate increased by 1.5%, then for government loans this is approximately plus 1%,” the expert explained.
Also, he said, consumer loans will “suffer.” “Rates on them will not increase that much. This is not scary, and this is exactly the goal of the National Bank – for the number of loans to decrease and the number of deposits to increase,” says Ionita.
At the same time, in his opinion, interest rates for business lending will not change significantly.
The head of the Expert-Grup analytical center, Adrian Lupusor, believes that we should expect an increase in rates on government securities.
What about inflation?
Veaceslav Ionita predicts inflation this year at 7–9%. “Inflation is more strongly influenced by an increase in the exchange rate than by an increase in the price of money. After inflation in 2022 (when it reached 34.6%), and at the beginning of 2025 (after the energy crisis), there are now risks of rising food and energy prices. Inflation at the level of 7–9% is noticeable, but for the Moldovan economy this is within the normal range,” Ionita said.
Speaking about food products, he noted that gas is used to produce fertilizers, and therefore they have risen significantly in price.
Economic expert Marin Gospodarenko, in turn, noted that the problem is that “incomes do not always grow at the same speed as prices.” “Thus, the decision of the NBM is a measure of protection, not comfort. The bank is trying to protect price stability, but in everyday life people immediately feel the downside: “expensive” money, more cautious lending and a high cost of living,” the expert explained.
Why was the National Bank’s decision criticized?
According to Adrian Lupusor, it is not clear why curbing inflation is limited to raising rates and is not accompanied by active communication. “Effective communication would have made it possible to get by with an even more modest increase (of only 0.5%), if such a decision had been accompanied by a clear call from the NBM to businesses and the population not to make hasty financial decisions, to wait for the end of the inflation shock, which is temporary, and not to fuel the spiral of expectations. Often, such clarifications and an active public position can be much more effective than a mechanical rate increase,” Lupushor said.
Also, according to him, it is unclear why the decision was made two months after the start of the energy crisis in the Middle East. “It was obvious that we were talking about an external inflation shock, which would inevitably cause “second round” effects and increase inflation expectations,” the expert explained.
He also called on the National Bank to more actively engage in fundamental research “to better understand the relationship between supply shocks and inflation expectations.” “It seems that the NBM often goes too far with tightening policy out of fear of “second round” effects, but empirical evidence is needed to trust the policy,” Lupusor noted, calling on the National Bank to publish the minutes of the meetings of the NBM executive committee for transparency, so that it is clear who participated in the decision-making and what arguments were given.
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