BCR revises downwards inflation forecast for Romania, expects steady monetary policy

Romanian bank BCR, part of Erste Bank Group, revised downwards its inflation forecast for the end of 2023 to 8.0% from 8.7%, citing soft commodity futures prices and lower energy prices.

“We expect core inflation to peak out in January 2023 at 15.4%, end 2023 at 9.2%, and remain above headline inflation over the entire forecast horizon. Headline inflation is projected to decline to around 5.0% by end-2024, still above the upper bound of the NBR’s target range of 2.5%±1pp,” according to the bank’s February 7 Instant Comment.

This comes amid a 7% figure mentioned by central bank spokesperson Dan Suciu as most likely. The revised Inflation Outlook from Romania’s central bank will be published after the February 9 Board meeting.

BCR expects the monetary authority to keep the key policy rate unchanged at 7.00% at this week's Board meeting, in line with broad consensus. The bank actually sees the BNR as keeping the key rate steady at 7% through the entire 2023.

It also points to the BNR using liquidity management as its favourite tool after dropping the remark on “tight liquidity management” from January monetary decision statement.

(Photo source: Gabriel Petrescu/Dreamstime.com)