North Macedonia Holds Key Rate at 5.35%

The National Bank of North Macedonia raised its key interest rate by 25 bps to 4.25% at its June 2026 meeting, the first hike since September 2023, citing lingering risks from geopolitical tensions. Policymakers said the current stance together with previous adjustments to other instruments including reserve requirements and macroprudential measures will help maintain exchange rate stability and anchor inflation expectations They noted that the annual inflation rate slowed to 4.8% in May from 5.7% in April, but remains elevated, indicating persistent inflationary pressures and a slower return to historical averages. Meanwhile, the central bank said the domestic economy remains resilient despite an uncertain external environment. Real GDP increased by 3.1% in Q1 2026, close to early projections, while available high-frequency indicators for Q2 remain scarce, though April data point to stronger industrial output and softer trade turnover.

The National Bank of North Macedonia kept its key interest rate unchanged at 4% at its May 2026 meeting, citing elevated global uncertainty and the need for more data to assess the impact on the domestic economy. Ongoing tensions in the Middle East have disrupted oil supply and kept energy prices high. The central bank warned it may raise rates if inflation remains elevated, affects expectations, or if FX market demand increases. Inflation slowed to an average of 3.7% in Q1 2026 from 4.2% in the previous quarter, mainly due to easing core pressures, which fell to 3.3%. However, inflation remains slightly above projections, and higher import prices point to upside risks. Despite expectations that the conflict may be temporary, projections for commodity prices, especially energy and food, have been revised significantly higher, reinforcing the need for a cautious policy stance.

The National Bank of North Macedonia left the main interest rate unchanged at 4% at its March 2026 meeting, maintaining a cautious policy stance, citing challenges posed by the Middle East conflict. Policymakers noted that inflation continued to slow as expected, reaching 2.9% in February, although rising global energy prices could exert upward pressure. The domestic economy remained resilient, expanding 3.5% in 2025, with Q4 growth at 3.8%, supported by strong investment and export performance. However, external risks have increased sharply, due to the recent outbreak of the Middle East conflict, which has disrupted global energy supplies and added uncertainty to global growth prospects. The central bank signaled readiness to use all tools to maintain the denar's stability against the euro and ensure price stability.