North Macedonia Holds Key Policy Rate at 4.25%

The National Bank of North Macedonia left its interest rate unchanged at 4.25% at its July 2026 meeting, citing uncertainty surrounding foreign prices and geopolitical tensions. Although headline inflation slowed in June to 3.4% from 4.8%, driven by lower food prices, policymakers stated more time was needing to assess price stability considering that inflation remains elevated, as foreign prices are still high and unstable due to geopolitical tensions and possible spill-over effects. Economic activity continues to show resilience, although growth slowed to 3.1% in the first quarter of 2026 from 3.8% in the prior quarter. Looking ahead, the NBNM stated it will continue to aim for stability of the denar against the euro, in order to ensur price stability in the medium term, and will closely monitor domestic and international economic and financial development.

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.