Moldova's c-bank holds key rate at 3.6%

The overnight loan and deposit rates were also left unchanged at 5.60% and 1.60%, respectively, the central bank, BNM, said in a press release on Thursday.

The rate cut was aimed at further stimulating aggregate demand, including by encouraging consumption and investment, and anchoring inflationary expectations.

Moldova's annual inflation eased to 3.3% in May from 3.5% a month earlier, which was lower than anticipated and below the 3.5% - 6.0% target band considered optimal for economic growth and development.

The central bank attributed the disinflationary trend mainly to a reduction in fuel prices, while base inflation and reduced food prices had a secondary role. Annual inflation dipped below the lower end of the target band due to a 9.2% reduction in natural gas supply tariffs implemented on May 3, as well as delayed execution of some budget expenditures.

In its May Inflation Report, the central bank said it expected inflation to remain around the target rate of 5.0%, with fluctuations within a range of approximately ±1.5 percentage points until the first quarter of 2026. However, the annual inflation rate may drop further below the target band until the second quarter of 2025, before it rises to enter the target band until the end of the forecast horizon

The main uncertainties regarding the inflation forecast revolve around agricultural production, tariff adjustments, international price volatility for raw materials, and global geopolitical instability.

The BNM's executive board will hold its next monetary policy meeting on August 6.

(1 euro = 19.1702 Moldovan lei)