National Bank of Moldova operates largest downward revision of inflation forecast over recent years

Chisinau, 29 April /MOLDPRES/-The National Bank of Moldova (BNM) revised downwards its inflation forecast for 2016 to 0.7 per cent, against 10.1 per cent as forecast in February. It has been the most sensitive revision of forecasts over the past few years.

The annual inflation rate will return into the limits of the variation interval of the five-per-cent target in the third quarter of 2016, one year earlier than what has been previously forecast. According to new forecasts, the annual inflation rate will reach 4.8 per cent in 2017, 1.8 percentage points below the previously approximated level. 

The downward revision of the annual inflation rate was caused by the inferior contribution brought by all the components of the inflation. The annual inflation rate reached 9.4 per cent or 0.9 percentage points less in March 2016 against the previous month. The slowdown occurred mainly due to a decrease in the contributions of food prices and basic inflation.

It is the second time BNM revises downwards the inflation forecast this year, after lowering it to 10.1 per cent against 11.9 as forecast in November 2015. The Central Bank tightened the monetary policy over 2015, raising the basic rate from 6.5 per cent to 19.5 per cent. However, it decreased the rate to 15 per cent, taking into account that the consumer price index is continuously declining in 2016.

According to BNM, the gradual calibration of the monetary policy stance, backed by expectations for the inflation rate to decrease, aims to facilitate a monetary environment able to boost up the lending and saving activity, along with the continuous adaptation of the internal economic environment to the volatility and uncertainty related to the external macroeconomic situation.

(Reporter V. Bercu, editor L. Alcaza)