The National Bank of North Macedonia decided on March 24 to keep its key interest rate unchanged at 4% (chart), citing heightened global uncertainty linked to geopolitical tensions.

At the upcoming treasury bill auction on March 25, the central bank will offer MKD36bn (€585.4mn), with future auction volumes to be set in line with weekly liquidity conditions in the banking system.

The bank said earlier adjustments to reserve requirements and macroprudential measures continue to support a prudent monetary policy stance.

The decision comes against the backdrop of increased global unpredictability following the recent escalation of conflict in the Middle East, which has already disrupted oil supply and pushed up energy prices.

The central bank warned that a prolonged or expanded conflict could lead to sustained price pressures, weaker growth and broader economic instability. Reflecting similar concerns, the European Central Bank recently held rates steady while revising inflation forecasts upward and growth expectations downward.

Domestically, inflation slowed to 2.9% year-on-year in February, broadly in line with expectations, although underlying price pressures eased more gradually than anticipated. However, risks to future inflation have increased due to potential energy supply disruptions and higher oil price projections.

Foreign exchange reserves stood at €5.56bn at the end of February, exceeding end-2025 levels and remaining adequate to support exchange rate stability. The country’s external position in 2025 outperformed expectations, providing a stronger buffer against potential shocks.

Economic growth remained resilient last year, reaching 3.5%, supported by investment and exports. Growth accelerated to 3.8% in the final quarter of 2025. However, the outlook for 2026 remains uncertain, with risks largely tied to external developments and the pace of domestic infrastructure investment.

Banking sector trends remain stable, with deposits continuing to grow and lending activity expanding at a moderate pace in early 2026.