The central bank had called an unscheduled monetary policy meeting as Moldova battles an energy crisis after Ukraine refused to continue transporting Russian gas to Moldova’s breakaway Transdniestria region.

“The decision was based on the analysis and assessment of recent macroeconomic information,” the central bank said in a statement, “in particular, prospects for accelerating inflation amid the increase in domestic tariffs for gas, thermal energy, and electricity in Dec 2024 and Jan 2025.”

Moldova is having to cover its energy needs with more expensive imported electricity after the supply of Russian gas via Ukraine to central and eastern Europe was halted on Jan 1.

The central bank said Moldova’s annual inflation hit 6.97% in December, up 1.6% points from November.

It said the rise was driven by the increase in gas tariffs, and that the sharp increase in energy prices would continue to create inflationary pressures.

Transdniestria, which escaped control from Chisinau in the 1990s, had received Russian gas free of charge via Ukraine. In turn, Moldova used to receive the bulk of its electricity from Transdniestria.

But the gas transit agreement between Ukraine and Russia expired at the end of 2024 and, as the war against Russia approaches its third anniversary, Kyiv refuses to do further business with Moscow.