Romania’s National Bank (BNR) has cut the inflation forecast for the end of this year to 3.8% and estimates an inflation of 3.1% for the end of next year, BNR governor Mugur Isarescu announced on Friday, when he presented the quarterly report on inflation.

BNR estimated in August 2019 an inflation of 4.2% for the end of this year and 3.4% for December 2020.

According to the central bank, the annual inflation rate is anticipated to remain outside the 2.5%+/-1pp target range at the end of 2019, mainly under the impact of non-volatile shocks incurred during the first part of this year. But tedium-term inflation expectations will remain elevated, anchored in the upper half of the target band.

Delayed effects of the local currency’s nominal weakening as well as significant positive output gap (GDP above potential levels justified by existing conditions) will trigger inflationary pressures in the second half of next year. Therefore, the values projected for the annual adjusted CORE2 inflation rate (which excludes from the CPI inflation administered prices, volatile prices, and tobacco and alcoholic beverage prices) are expected to bottom out from a minimum of 2.8% in June 2020 to 3.2% in December 2020 and 3.4% in September 2021 at the end of the forecast period.

editor@romania-insider.com

(Photo source: Bnr.ro)