National Bank of Moldova forecasts 10.1-per-cent inflation rate in 2016

Chisinau, 4 February /MOLDPRES/-The National Bank of Moldova (BNM) forecasts an inflation rate that will exceed the upper limit of the five-per-cent target ± 1.5 percentage-point variation interval in the next four quarters, and will return to the initial target in the third quarter of 2017. The forecasts are included in the inflation report unveiled by BNM during a news conference today.

According to BNM, the average annual inflation rate for 2016 and 2017 reaches 10.1 per cent and 6.6 per cent, respectively. “It is the first time over the last four quarters for BNM to lower its forecasts on the inflation rate,” BNM governor Dorin Dragutanu said. BNM forecasted an 11.9-per-cent average annual inflation rate for 2016 in November 2015.

“Inflation has probably reached its highest of 13.6 per cent in the fourth quarter of 2015 and the first signs of a slowdown in the price growth will show up in the first quarter of 2016,” Dragutanu said.

Inflation will decrease and reach 12.4 per cent in the first quarter of 2015. The change in the forecasts on the average annual inflation rate for 2016 “is caused by the inferior contributions of regulated prices, as well as fuel and food prices, their effects being balanced by the slightly-superior contribution of the basic inflation,” the report states.

“The pace of the price growth will slow down, but rather slowly, only in the third quarter of 2017, causing the inflation to reach 6.5 per cent,” Dragutanu said. The downward revision of the inflation forecast has also been significantly influenced by the evolution of international fuel prices. Three months ago, BNM took into account an average price of 53 dollars per barrel, while the forecast it made public today stipulated an approximate 32-dollar price per barrel.

BNM expects that regulated prices will be lower in 2016. The evolution of fuel prices is significantly lower against the previous report, due to inferior forecasts on oil price and gas import price. Food prices will stay at a relatively lower level over 2016 and will register an insignificant growth in 2017.

BNM’s executive board during the meeting on 28 January 2016 maintained the base rate applied on the main monetary policy operations on short term at the current level of 19.5 percent annually. Dragutanu highlighted that the real rate of interest would be restrictive in 2016 and slightly stimulating in 2017, as it will decrease slower than the inflation rate.

(Reporter V. Bercu, Editor A. Raileanu)