RSS
Isarescu:annual inflation will be close to zero in February and is kept under the variation level until September
The annual rate of inflation will be placed under the minimum level of the variation interval, 1.5 respectively, until the end of September of this year, the lowest point being in February when it gets closer to zero, mainly due to the low prices for oil on an international level and the embargo imposed to Russia which leads to the redirection towards the Romanian market of a surplus of food, stated on Monday the governor of the National Bank of Romania Mugur Isarescu in a conference for the presentation of the quarterly report on inflation.
‘The projected trend includes the annual rate of inflation under the low limit of the variation interval around the central target until the end of Q3 2015, followed by the maintenance to inferior values to the central target of 2.5% until the horizon of the prognosis (the end of 2016). The lowest point of inflation is in February, after which, due to the basic effect, even if the monthly increase is extremely low, we will have increase of the indicators (IPC) due to the basic effect until September’ explained the BNR governor.
According to BNR estimates, in January 2015, annual inflation will be around 0.3% and in February the indicator is expected to get to zero. Moreover, for the whole year of 2015, the central bank estimates that the inflation rate will depend on the basic effect. ‘ In the summer of last year we have sensible negative increase. As a consequence, we might have the following scenario:monthly increase zero, in exchange, due to the basic effect which acts differently, the indicator will increase with the negative of last year. And this is the main motivation for the inflation curb: the basic effect’ Isarescu explained.
According to the quarterly report on inflation, the causes for the upward deviation of inflation from the established trend could be the volatility of the capital flows addressed to emerging economies, in the context of reamplification of geopolitical tensions, the perspectives of evolution of the economies of the euro zone ( in the context of the situation in Greece) and major emerging ones. At the same time, a risk of growth over expectations of the consumption prices comes, according to BNR, from the uncertainties regarding the firm implementation of the set of structural reforms and measures agreed with the international institutions.(EU,IMF,WB).
BNR revised, recently, the inflation prognosis for 2015 from 2.2% to 2.1%and for the end of the year 2016 announced a prognosis of 2.4%. The stationery target on medium term is 2.5% plus/minus a percentage point.