Loading ...The National Bank of Romania (BNR) revised its 2008 inflation projection upwards from 6.6 to 6.7%; BNR took a similar step for the 2009 inflation projection, adjusting the figure from 4.2 to 4.5%, reads the central bank’s Quarterly Report on inflation presented on November 3 by BNR governor Mugur Isarescu.
The inflation target was further kept at 3.8% for 2008 and 3.5 for 2009, plus/minus 1%. Isarescu said that the inflation projection underwent minor changes from the estimations made three months ago, but underscored that never before has the central bank been on such uncertain ground in working out its forecasts.
According to the BNR governor, in a certain scenario, the inflation rate could fall even below 1% by end-2009, but could also go past 5% in a different evolution.
According to the BNR governor, in a certain scenario, the inflation rate could fall even below 1% by end-2009, but could also go past 5% in a different evolution.
Referring to the causes that could take inflation out of the forecast path, Isarescu mentioned a set of symmetric risks that could either push inflation up or press it down – like the evolution of the oil price on international markets, the persistence of the international financial turmoil, the trend of administered prices in Romania, the dynamics of foodstuff prices, the exchange rate evolution.
Among the asymmetric risks that could only take inflation upwards Isarescu mentioned the wage rise outpacing productivity growth, or the inadequate coordination of the mix of economic policies; a steeper slowdown in economic growth could have an opposite effect.
Isarescu added that even if the foreign currency credit will be strongly tempered in the next period, pressure on inflation caused by demand in excess would increase in the next quarters, on the background of risings incomes.
Isarescu added that even if the foreign currency credit will be strongly tempered in the next period, pressure on inflation caused by demand in excess would increase in the next quarters, on the background of risings incomes.
“We do not see the future government putting an extremely brutal brake on budget wage outlays,” said the BNR official.
The evolution of the oil price that – as Isarescu explained – at a time of widespread recognized recession, will keep below 100 dollars per barrel, will have a positive influence on the inflation rate.
The European Commission on Monday amended its forecasts on Romania’s inflation rate by 0.2% for 2008 to 7.8%, and by 0.9% for 2009, respectively, to 5.7%, anticipating also a reduction of the annual rate to 4% in 2010.
The evolution of the oil price that – as Isarescu explained – at a time of widespread recognized recession, will keep below 100 dollars per barrel, will have a positive influence on the inflation rate.
The European Commission on Monday amended its forecasts on Romania’s inflation rate by 0.2% for 2008 to 7.8%, and by 0.9% for 2009, respectively, to 5.7%, anticipating also a reduction of the annual rate to 4% in 2010.
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