Inflation remains in negative territory until July this year and will return in the range of the stationary target of 2.5 per cent at the end of the forecast horizon, the Governor of the National Bank of Romania (BNR) Mugur Isarescu told a Thursday’s press conference.
‘In today’s meeting, the BNR Board examined and approved the Report on inflation, the May 2016 edition. The Report presents the new quarterly forecast, which estimates the extension of the negative values of annual inflation rate until July 2016, following the manifestation of the transient effects of the reduction in VAT and other indirect taxes, and the decrease in some administered prices (energy). The basic scenario foresees a gradual return of inflation within the range associated to the target and placing in its upper tier at the end of the forecast horizon [eight quarters],’ said Isarescu.
According to him, the risks associated to the projection are generated by both domestic and external sources, given some high uncertainties.
In terms of foreign risks, the governor mentioned increasing the fears over global economic growth, re-deepening of the situation in Greece and the UK referendum nearing. ‘Added to these uncertainties are those related to volatility of financial markets, geopolitical tensions, divergences between the conduct of monetary policies of major central banks of the world and the trend of oil price,’ said Isarescu.
Domestically, the inflation risks are represented, in the opinion of the BNR governor, by fiscal and revenue policy, as well as the adverse effects generated by changes in financial legislation.
Romania recorded in March 2016, compared to March 2015, the largest negative inflation among the 28 member states of the European Union, with a rate of minus 2.4 per cent, compared to that of minus 2.1 per cent in February, show the data released by the European Statistics Office (Eurostat).
BNR maintains monetary policy interest rate at 1.75 pc per year
The Board of the National Bank of Romania (BNR) decided on Thursday to maintain the monetary policy interest rate at 1.75 percent per year and to keep the current levels of the reserve requirements applicable to the RON and forex-denominated liabilities of credit institutions, a Central Bank communiqué shows.
Likewise, BNR’s Board decided the adequate management of liquidity in the banking system.
The monetary policy interest rate has remained unchanged since May last year.
Also on Thursday, the BNR Board analysed and approved the new quarterly report on the inflation rate, a document that will be publicly presented at a press conference on May 10.