Rate Cuts in Macao, Hong Kong, Moldova and Norway – Currency Thoughts

Rate Cuts in Macao, Hong Kong, Moldova and Norway

September 18, 2025

Moldovan monetary policy has been heavily influenced by the Covid pandemic and the war between Russia and Ukraine, and the interest rate has undergone wild swings this decade. The Bank of Moldova’s policy interest rate was today cut by 25 basis points to 6.0% in a move that analysts had not predicted. This was the fourth rate change of 2025, following a 200-basis point increase in January, another hike in February of 90 bps and a cut of 25 bps in August. Moldovan CPI inflation fell from 34.6% in late 2022 to 3.3% in August 2024, then jumped to 9.1% by January 2025, and has slowed since to 7.3%, which remains above the 3.5-6.5% target range. But GDP has been depressed by weak export demand and posted  year-on-year declines in the last three reported quarters.

The Bank of Norway as was expected cut its policy interest rate today by 25 basis points to a two-year low of 4.0%. Today’s move was only the second since normalization began three months ago. But today’s explanation behind today’s explanation struck a cautionary tone:

Incoming data since June indicate that there is a little less spare capacity in the economy, and that inflation may remain elevated for a little longer than projected in June. Therefore, we will probably not reduce the policy rate ahead as quickly as envisaged before summer. The forecast presented today is consistent with one rate cut per year in the coming three years.

Central bank rate reductions of 25 basis points were done in both Hong Kong and Macao. Those decisions became necessary when the Fed cut its rate yesterday. Interest rate policy in Hong Kong has been subordinated to maintaining a pegged parity of the former British colony to the U.S. currency. That currency policy began in 1983. Analogously, Macao’s base rate shadows the interest rate of the Hong Kong Monetary Authority. Both interest rates are now at 4.5%.

Copyright 2025, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

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