Inflation “not by the book,” or Welcome to the crisis? 20.02.2026

Commentary by InfoMarket agency

 

 

The beginning of 2026 was marked by a number of decisions and processes that will largely determine Moldova's financial trajectory for the coming year. The focus is on the National Bank's policy, inflation dynamics, the state of foreign exchange reserves, and the Moldovan leu (MDL) exchange rate.

 

In December 2025, the National Bank of Moldova (NBM) lowered its base rate from 6% to 5% per annum, and in February 2026, it confirmed this decision, keeping the rate at the same level. It is clear that the decision was approved in anticipation of the effect of previously adopted measures.

 

The NBM resumed its monetary policy easing measures back in August 2025, lowering the rate from 6.5% to 6.25% per annum. At the time, the regulator justified its decision by saying that it was taken in the context of slowing annual inflation and was aimed at anchoring inflation expectations, taking into account temporary lags. However, the August decision was made at a time when inflation had not yet entered the target corridor of 5% per annum ± 1.5 percentage points (i.e., the range of 3.5%–6.5% per annum).

 

Inflation in August, at 7.3% per annum, was still above the upper limit of the acceptable range (6.5%). And although the classic rule says that a reduction in the base rate stimulates inflationary pressure, the regulator continued its easing policy and lowered the rate in September and December, then kept it unchanged in February.

 

Inflation behaved “against the rules” and, at the end of January 2026, returned to the target range for the first time in 14 months, falling from 6.84% to 4.85% per annum. This is a very sharp decline in inflation: by 1.9 percentage points, or one-third!

 

Inflation dynamics over the past year deserve special attention. And since one of the NBM’s most important tools for keeping inflation within the target range is the base rate, we have superimposed the dynamics of the two indicators on a single graph.

 

Inflation and NBM base rate dynamics (January 2025 – February 2026)

 

 

Taking into account the reality of the situation, the NBM in February decided not to further reduce the base rate, keeping it at 5% per annum, but at the same time reduced the mandatory reserve requirements for funds attracted by commercial banks in both lei (MDL) and foreign currency by 2 p.p. and 3 p.p. to 18% and 26%, respectively. As the regulator emphasized, this measure was aimed at covering the banking system's liquidity needs and supporting domestic demand.

 

This process began earlier. In 2024-2025, the NBM lowered the mandatory reserve requirements for funds attracted by commercial banks in MDL and foreign currency. In April 2024, the rates for the MDL were 33%, which corresponded to MDL 24.9 billion, but the rates gradually decreased and by the end of 2025 they amounted to MDL 17.3 billion.

 

For foreign currency, the reserve requirements were reduced from 43% in April 2024 to 39% at the end of 2025. The NBM reports reserves in euros and US dollars separately: in April 2024, reserves amounted to USD 258 million and EUR 670 million; and at the end of 2025, they amounted to USD 168 million and EUR 469 million.

 

Thus, by reducing the mandatory reserve requirements for funds attracted through commercial banks, in less than two years, MDL 7.6 billion (from deposits in MDL) were released, as well as USD 90 million or MDL 1.5 billion from deposits in USD and EUR 201 million or MDL 3.9 billion from deposits in EUR. In aggregate - MDL 13 billion, which also puts pressure on inflation.

 

Ideally, the funds released by banks should go towards lending to the economy. This has happened in part: if at the end of 2024, the volume of loans in the banking system amounted to 80.8 billion lei; then by the end of 2025, it was 103.6 billion lei. The growth over the year was 22.8 billion lei, or 28.2%. In terms of lending volumes, it appears that the loan portfolios of commercial banks have “absorbed” part of the MDL mass that the NBM has “released” lately.

 

But the National Bank has another tool: currency interventions. And in 2025, the regulator actively sold euros: EUR 190.5 million, equivalent to approximately MDL 3.7 billion.

 

NBM interventions on the foreign exchange market in 2025 (million euros)

 

Jan

Feb

Mar

Apr

Mai

Jun

Jul

Aug

Sept

Oct

Nov

Dec

SPOT operations

Bid rate

USD

EUR

10,00

15,00

Ask rate

USD

EUR

22,40

25,50

1,50

1,50

27,60

64,00

40,00

33,00

 

By making very serious interventions in the currency market, the NBM reduced its own foreign exchange reserves for the first time in five years: in 2025, they fell by EUR 143 million.

 

Dynamics of NBM foreign exchange reserves in 2020-2025 in millions *

 

	USD	EUR	USD	EUR
	Absolute values		Difference to the previous year
Dec 2020	3784
Dec 2021	3902		+118
Dec 2022	4474		+572
Dec 2023	5453		+979
Dec 2024	5484	5247		+31
Dec 2025		5104		-143

 

*Foreign exchange reserves until 2024 are shown in US dollars, and in December 2024 – in both US dollars and euros, as Moldova switched to the EUR as its national currency at the beginning of 2025.

 

However, there are two other indicators that need to be taken into account: interest rates on government securities (GS) and the MDL exchange rate. Interest rates on GS remain at 9.0%-9.5% per annum (this refers to the yield on benchmark GS with a maturity of 182 days or 364 days), and the freed-up funds of banks are also placed in this market. However, these funds are insufficient for the government securities market. The Ministry of Finance may encounter difficulties with lending on the government securities market.

 

The situation with the national currency exchange rate is even more interesting. Let us remind you that in January 2025, Moldova switched to using the EUR as the base currency for setting the exchange rate. Since the MDL was introduced on November 29, 1993, the exchange rate against other currencies was first determined by the MDL’s exchange rate against the USD and then, through cross rates, against other currencies. Since January 2, 2025, the EUR has become the pegged currency. Now, to understand whether the MDL is strengthening or depreciating, one must look at its exchange rate against the European currency, not the American one.

 

Currency interventions by the NBM, in particular the sale of currency, also release the MDL mass and affect the exchange rate of the MDL. Foreign currency becomes attractive to commercial banks, especially during periods of base rate cuts.

 

In 2025, the NBM supported the MDL exchange rate by selling currency. For example, note in the table that in July, the NBM sold EUR 64 million on the market, when the MDL exchange rate had reached its peak of 19.8376 (July 13). This currency dump in July may have influenced the regulator's decision in August to lower the base rate, which had remained “stable” from February to July (6.5%). It also had to dampen demand for the EUR in September and October.

 

However, further support for the MDL exchange rate is complicated by the emerging negative dynamics of foreign exchange reserves. A reasonable question arises: up to what amount of EUR sales is the regulator prepared to support the MDL exchange rate in 2026 at the expense of its foreign exchange reserves?

 

The situation is further complicated by a global factor: the Moldovan currency is, in a sense, a “hostage” to the currency war between the EUR and the USD, which has intensified in recent months when US President Donald Trump spoke in favor of a weak dollar, thereby stimulating exports.

 

As a result, the USD is getting cheaper: if on January 4, 2025, the USD to EUR exchange rate was 1.03, by February 10, 2026, it was 1.19.

 

EUR to USD exchange rate dynamics (January 2025 - February 2026)

 

 

Therefore, it is not surprising that the MDL exchange rate exceeded MDL 20 lei per EUR in early February. Given current trends, it is unlikely that the exchange rate will return below this level in the near future.

 

The MDL exchange rate dynamics against the EUR (January 2025 - February 2026)

 

 

It is too early to draw conclusions, but some indicators have already emerged. In 2025, the regulator actively released the MDL mass using several instruments at its disposal—through interest rates, reserve requirements, and currency interventions. A reduction in the base rate usually leads to some depreciation of the MDL. Lowering reserve requirements, like selling currency, also increases the amount of the MDL in circulation. All this puts pressure on inflation and the national currency exchange rate.

 

These funds are expected to be used to finance the economy and to meet the Ministry of Finance's proposal to sell government securities. However, with the expected decline in GS rates, the Ministry of Finance is unlikely to have enough bids to sell all the planned securities. (It should be noted that in 2025, it was planned to allocate 9,1 billion lei from the sale of government securities to cover the budget deficit, and in 2026 - 10 billion). Finally, the pegging of the MDL to the EUR will reflect events in the Eurozone, where most experts forecast a strengthening of the EUR against the USD, and with good reason.

 

Against the backdrop of these events and facts, Moldova can probably expect a reversal in some overvalued markets. This is especially true against the backdrop of a decline in the purchasing power of the population, which is a separate topic for discussions.

 

And finally, it should also be noted that in early 2026, there were serious indicators that the world was on the verge of another crisis. In previous years, the echoes of global crises reached Moldova a year later: the 1997 crisis reached us in 1998, and the 2008 crisis reached us in 2009. But now, given Moldova's even greater ties to the Eurozone, the country will not have a “spare” or “preparatory” year. Will we enter the crisis alongside everyone else? // 12.02.2026 - InfoMarket.