Central Bank keeps inflation targets for Romania, warns of potential worsening forecast due to political tensions

Romania's Central Bank (BNR) kept the country's inflation rate forecast at 3.3 percent for end-2012 and at 3 percent for 2013 onwards, according to its most recent inflation forecast report. The values are similar to those in the February and May 2012 Inflation Reports.

However, the inflation rate projection is closer to the maximum threshold than previously estimated, due to external factors, such as the economic and political tensions in Greece, Italy and Spain, as well as the heightening political tensions in Romania, which have already fueled foreign investor aversion towards leu-denominated investments. “A major risk to the inflation forecast is the delay in the alleviation of such tensions, as envisaged in the baseline scenario,” according to the BNR. Moreover, within the context of further elections before the end of the year, another relevant risk relates to slippages in fiscal policy and structural reform implementation from the commitments assumed under the agreements signed with the international institutions, BNR continues in the report. editor@romania-insider.com (photo source: Sxc.hu)