Marina Solovieva, Program Director of the Independent Center Expert grup
Earlier, Logos Press noted “mixed reactions among members of parliament”. While some consider the measure necessary to curb inflation, others warn of its negative consequences.
“It seems to me not quite justified to raise the prime rate from 5% to 6.5%, given that the current acceleration in price growth is mainly due to an external supply shock (rising global fuel prices) and regulated tariffs,” said Marina Solovieva, program director of the Independent Center Expert grup Marina Solovieva.
Rate increase in Moldova and “imported” inflation
“According to inflation data, in March, consumer prices rose by an average of 5.8% compared to March 2025,” comments the expert. – The greatest contribution in this sense was made by fuel, which rose in price by 12%, some utilities (water and sewerage +20%, electricity +16%), as well as some food products (eggs +41%, fruit +16%). It is very doubtful that the increase of the prime rate in Moldova will be able to somehow affect the “imported” prices and restrain inflation”.
Marina Solovieva assumes that when making such a decision, the NBM proceeded from three considerations:
– Prevention of secondary effects (higher fuel costs will lead to higher prices of other goods and services, especially transportation and agricultural products);
– the need to react to the deterioration of inflation expectations (recent results of the conjuncture survey published by the NBS showed that managers of enterprises expect a moderate increase in prices, which means that they can raise their prices preventively);
– concern for its own reputation (if the NBM does not do anything in response to the accelerating price increase, it may cause a negative reaction in the society, even if in fact the NBM can do little about the situation).
“Unpleasant consequences” of the decision
“Despite these arguments, the decision to raise the prime rate when the economy is already stagnating may have unpleasant consequences,” Marina Solovieva notes. – Economic growth last year was only 2.4%, while the IMF’s forecast for Moldova for 2026 is 1.9% growth.
In the same conjuncture survey, business executives complained about weak demand. A prime rate hike could make loans more expensive for both businesses and consumers, slowing economic activity further.
In the end, we may still end up with accelerated price growth, because monetary policy measures are ineffective in the case of imported inflation, plus slow down the already weak economic growth”.
