Regular meeting of the Monetary Policy Executive Board

Skopje, 28 July 2026 Skopje, 28 July 2026

The policy rate is unchanged-high uncertainty remains

On 28 July 2026, the National Bank’s Executive Board held a regular meeting on the monetary policy setup. At this meeting, following the policy rate increase in June, the Executive Board decided to keep the policy rate at the level of 4.25%. This decision lies on the latest macroeconomic indicators and assessments of both, domestic and external environment risks.

The developments on the foreign exchange market have been stable since early May, but the increasing demand for foreign currency from the corporate sector remains, partly as a result of the higher energy prices. The level of foreign reserves remains in the safe zone and at an appropriate level for the needs of maintaining the denar exchange rate stability. In June, the annual inflation rate decelerated, partly due to the last year’s base effect. The Executive Board assessed the necessity for more time to confirm the sustainability of the decelerating inflation trend, given the high uncertainty in the external environment, the re-escalation of the Middle East tensions and possible spillover effects on the foreign exchange market and domestic prices. The renewed escalation of the military activities in the Middle East, as well as the Russia-Ukraine war have triggered strong upward pressures on the energy prices and other primary commodities and supply chain disruptions. In addition, domestic factors influencing demand remain and create risks to the future inflation trajectory. In such conditions, it was assessed that the current monetary policy stance is appropriate. The maintenance of the policy rate, together with the measures taken so far in reserve requirement and macroprudential policy will contribute to maintaining the stability of the exchange rate of the denar against the euro, gradual return of the inflation to the historical average and further strengthening of inflation expectations, also affecting the credit standards in economy. At its last meeting, the European Central Bank also kept the interest rates , estimating that the uncertainty remains high, while inflation in the euro area hasn’t been effected by the energy shock yet.

Regarding the latest data on the main macroeconomic indicators, at the end of June, foreign reserves amounted to Euro 4,936.4 million and remain in the safe zone in accordance with the adequacy indicators. As of early May onwards, the foreign currency market is stable, amid minor National Bank interventions both, on the side of sales and on the side of purchasing foreign currency. In June 2026, the annual inflation rate further decelerated dropping to 3.4%, which is lower than expected in the April forecast. The slowdown is mostly due to the moderate food price growth, amid favorable seasonal and base effects, as well as to the decelerated core inflation which is related to the volatility of the air transport prices.  However, the inflation is still relatively high, while import prices remain high and unstable, in conditions of prolonged uncertainty due to geopolitical development.  The latest forecasts for import prices point to higher foreign inflation, while the uncertainty and risks related to future dynamics of global commodity prices remain pronounced, especially due to re-escalation of military actions On the other hand, the European Commission surveys conducted in June point to consumers’ expectations for further, but significantly moderate growth of the general price level in the next 12 months.

The domestic economy continues to show resilience amid uncertain external environment. In the first quarter of 2026, the real GDP growth amounted to 3.1%, while the available high-frequency indicators for the second quarter point to a possible acceleration of the annual growth .  As for the monetary sector, the credit support of the demand in economy remains stronger compared to the forecasts, amid stronger growth in deposit base as well.

The National Bank remains committed to the maintenance of the stability of the exchange rate of the denar against the euro, as a basic prerequisite for providing medium-term price stability. For that purpose, the National Bank will continue to carefully monitor the domestic and international economic and financial developments, will assess their effects on the foreign exchange market and inflation and is ready to use all the available instruments for preserving macroeconomic and financial stability.