A synchronized wave of central bank interest rate decisions is expected to dominate the global financial calendar this week. At the same time, it is widely believed that G7 policymakers will maintain current borrowing rates. From Washington to Brussels to Tokyo, officials are adopting a wait-and-see attitude, prioritizing stability in the face of the inflationary implications of continued instability in the Strait of Hormuz.
“The collective decision to keep interest rates unchanged marks a significant shift from the initial and ultimately flawed concept of ‘temporary’ inflation that characterized the 2022 energy shock,” says analyst Simon Mugo in investing.com Research’s Financial Analysis Reports.
A rejection of soft policy
The paradigm shift, according to the expert, will be for central banks (especially the G7) to keep interest rates high despite the volatility in energy prices caused by conflicts in the Middle East. This indicates a rejection of soft policy.
The fallacy of previous monetary policy was the stance of “temporary” inflation, which turned out to be a failure. The 2022 price spike that caused the energy shock was seen by many regulators as a temporary phenomenon that would go away on its own. Regulators are now acting more decisively, not waiting for inflation to get out of control, and holding rates to avoid a prolonged inflation cycle.
In the context of April 2026, despite the oil price shock due to the Gulf conflict, analysts expect the “hold” approach of central banks to prevent inflation from taking hold, as rising prices are more likely to depress real wages and consumer spending than to trigger a wage-price spiral.
Beating inflation is a priority
Keeping rates high (“higher for longer”) instead of lowering them quickly suggests that beating inflation completely, even at the cost of slowing the economy, has become a priority.
In essence, Simon Mugo is pointing out that central banks are no longer trying to “wait out” inflation, but are actively curbing it, having recognized that their past forecasts were wrong.
The geopolitical impact on monetary policy, however, is ambiguous. The protracted conflict has effectively become the invisible hand that determines global monetary policy. Rising commodity costs threaten to undo the progress made in stabilizing long-term inflation expectations.
Overcoming systemic uncertainty
Beyond immediate interest rate decisions, the market is watching closely for signs of structural economic divergence.
“In managing this transition, central banks will remain focused on whether they can successfully manage the twin risks of slower economic growth and sustained energy-induced inflation without triggering a systemic liquidity shortage,” writes Simon Mugo.
The global economy remains in a state of uncertainty, awaiting either a de-escalation of maritime trade tensions or a clearer signal of the sustainability of current domestic growth trends.
What to expect for Moldova?
The National Bank of Moldova (NBM) is also cautious due to external uncertainties, including regional conflicts and energy market turbulence that could reignite prices. The NBM’s current pause in rate changes is due to the need to assess the effect of previous policy easing steps taken at the end of 2025.
The prime rate at 5% per annum was maintained at the March 19, 2026 meeting. In March, annual inflation amounted to 5.8%, which is within the NBM’s target range. At the same time, the forecast for the average inflation rate at the end of 2026 was previously expected at 4.3-5.0%. The regulator expects prices to stabilize in the second half of 2026 after a slight spike in the beginning of the year, caused by volatility in energy and import prices.
NBM Governor Anca Dragu has been taking a number of steps to organizationally “reconcile the clock” with officials, making a number of trips to events in Brussels to discuss the harmonization of the national regulatory and supervisory framework in the financial sector with the EU legislation, as well as the recognition of the equivalence of the prudential system of Moldova’s banking activity to the EU system.
“The National Bank is actively involved in the process of harmonization of the national legislation with the EU acquis communautaire, and obtaining the recognition of equivalence of the national banking prudential system to the European one is a strategic objective in this process. The progress achieved in the financial sector confirms the institutional capacity to implement the European rules and reflects the NBM’s active contribution to the process of preparing Moldova’s accession to the EU,” Anca Dragu said in Brussels.
Aiming at a long-term convergence with the European Central Bank’s (ECB) objectives, the NBM is likely to keep the prime rate at the level of 5 per cent at the next meeting in May 2026. NBM Governor Anca Dragu emphasizes that monetary decisions are data-driven, with a focus on supporting economic activity without compromising price stability – similar to the ECB’s approach.
Despite the current slowdown in price growth, the NBM shares the ECB’s concerns about new risks. The risk of rising fuel and gas prices due to geopolitical tensions, including events in the Middle East, remains a key factor that could force the regulator to tighten policy again.
