The central bank of North Macedonia announced on March 12 that it will keep the interest rate on treasury bills unchanged at 5.35% (chart).

In making this decision, the central bank considered inflation trends, external risks and domestic factors influencing aggregate demand. Amid global geopolitical uncertainties and rising protectionist policies, market volatility in primary commodities has increased, reinforcing the need for prudence.

The central bank also said that overnight and 7-day deposit rates remained steady at 3.95% and 4%, respectively.

The supply of treasury bills at the regular auction remains fixed at MKD10bn (€162.6mn), reflecting a cautious monetary policy stance.

Authorities expect that the current interest rate levels, in combination with previous reserve requirement adjustments and macroprudential measures, will support medium-term price stability and maintain the denar’s exchange rate stability against the euro.

Inflation averaged 5% in January and February 2025, supported by a lower comparative base from the previous year. While some price categories saw moderate monthly growth, core inflation remained neutral.

Annual core inflation trends indicate relative stability, with signs of a slowdown in February. Consumer expectations, based on European Commission surveys, suggest a stronger reduction in prices in the near future. However, projections for primary commodity prices have shifted upwards, signalling potential risks and necessitating continued caution.

The foreign exchange market remains stable, with favourable trends in foreign exchange reserves, which totalled €4.86bn at the end of February. This level is sufficient to sustain the stability of the domestic currency. Foreign exchange reserves since the beginning of 2025 have moved in line with first-quarter expectations.

In external trade, North Macedonia’s January trade deficit was slightly below projections for the first quarter. Net inflows from private transfers were more moderate than anticipated, while the current account deficit in the fourth quarter of 2024 was marginally higher than forecasted.

However, stronger-than-expected net financial inflows, particularly in direct investments, helped to offset these effects.