This conclusion is not explained by the NBM in any way. Although this forecast is a significant factor in assessing the cost of external public debt.
The central bank outlines its scenarios of external circumstances that may affect the domestic monetary policy in the updated medium-term inflation forecast. Among them are the already traditional concerns about the development of the geopolitical situation, volatility of major currencies, the ECB monetary policy and world prices in the energy and food markets.
Energy and food prices
The medium-term forecast for inflation, which will decline until the end of 2026, has been influenced by energy prices.
The NBM believes that global oil prices “will continue to be influenced by OPEC+ policy of returning previously limited production capacity to the market”.
True, natural gas prices in Europe could be negatively impacted by the pressing need to replenish inventories in Europe, the regulator said. Although weak demand from Asian countries may reduce the pressure on prices on the international market.
The NBM also has no particular concerns about food inflation – “with the exception of extraordinary circumstances, international food prices are expected to develop in a balanced manner”.
The annual growth rate of domestic food prices “will continue its downward trend in the first two quarters of the projection period, and then, after rising from the end of 2026, will gradually decline towards the end of the projection period”.
On this basis, the document said, “the annual rate of increase in fuel prices will be negative at the beginning of 2026, then turn positive and increase towards the end of the projection period” as the rate of increase in regulated prices will decline significantly at the beginning of the year with a gradual increase during the year.
The next “spiral” will end with a decrease only at the beginning of next year, the National Bank forecasts.
Medium-term inflation forecast
In early 2026, the annual rate of inflation will decline, after which it will remain relatively stable until the end of the year. And at the beginning of the next year will record a new slight decline, subsequently stabilizing at the same level for the last three consecutive quarters.
In the first quarter of 2026, the annual inflation rate will return to the range of the target inflation rate and remain close to it until the end of the forecast period for several years.
The annual rate of core inflation will follow a downward trend starting in the second quarter of the projection period. And starting from the next year it will register a slight increase.
Aggregate demand will not recover
Aggregate demand will be negative throughout the forecast period, mainly due to restrictive real monetary conditions until the end of 2027 and to a lesser extent due to negative fiscal impulse.
A marginal increase in external demand throughout the forecast period will boost aggregate demand, but to a small extent.
Overall, external factors will not be the main driver of growth, and economic activity will depend more on domestic conditions and fiscal policy.
