National Bank of Moldova worsens inflation forecast for 2026-2027 due to impact of Middle East crisis

CHISINAU. May 14 (Interfax) - The National Bank of Moldova (NBM) has updated its inflation forecast and now expects average annual inflation in 2026 at 7%, and at 5.8% in 2027, according to a new report on inflation published on the regulator's website.

In February, the NBM forecast that average annual inflation this year would be 5%, and next year 4.5%.

"In March 2026, the annual inflation rate reached 5.81% as a result of rising fuel prices in the context of the war in the Middle East. The rise in energy prices, its secondary effects, as well as other supply imbalances will contribute to inflation growth in the coming period. Disinflationary domestic demand will partially mitigate this impact," the NBM said regarding the worsening of the inflation forecast.

According to the NBM's forecast, the annual inflation rate will be at the upper bound of the deviation range from the target (5% plus-minus 1.5 percentage points) in Q2 2026, and starting from Q3 it will exceed the upper bound of the range for three consecutive quarters. Subsequently, from Q2 2027, inflation will return to the target range. Annual inflation will reach its maximum value of 8.6% in Q4 2026, then will slow down and reach its minimum value of 4.1% in Q4 2027 and Q1 2028.

However, the NBM said that there is pronounced uncertainty regarding the inflation forecast due to possible adjustments in energy tariffs as well as the tense situation in the Middle East and the risk of its escalation.

The National Bank expects that fuel price growth will peak in Q2 2026, after which it will slow until the middle of next year, with price decreases expected in Q2 and Q3 2027, and then prices will rise slightly by the end of 2028.

The NBM also believes that aggregate demand in the economy will be weak in 2026-2027 and will continue to decline until the beginning of next year, and then will recover slightly by the end of next year. At the same time, monetary conditions will constrain aggregate demand throughout the forecast period, it said.

As reported, on May 7, the NBM sharply raised the refinancing rate from 5% to 6.5% due to accelerating inflation amid the Middle Eastern crisis, which led to an increase in energy prices.