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Inflation forecast revised by central bank upwards to 2.7 pct for end-2017
The National Bank of Romania (BNR) revised upwards to 2.7 pct the inflation forecast for the end of 2017, central bank governor Mugur Isarescu said on Thursday.
The previous inflation prognosis was parked at 1.9 pct in 2017.
As for the end of 2018, the BNR estimates an inflation rate of 3.2 pct, similar to the previous forecast, and for the end of 3rd quarter of 2019 a 3.1 pct inflation rate is expected.
According to the BNR, the exceeding of the upper limit of the target interval in the first part of 2018 is mainly due to some basic statistical effects associated to the cut of certain taxes and indirect dues at the beginning of 2017, the anticipated evolution of the exogenous developments and the accumulation of inflationary pressure linked to the domestic milieu, at the basic inflation's level.
Calculated for constant taxes, the inflation rate will reach 3.3 pct in December 2017, 3.1 pct at the end of 2018 and 2.9 pct at the prognosis' time horizon, 30 September 2019.
“The exceeding of the upper limit of the inflation target in the first part of 2018 is due mainly to the statistical effects associated to tax cuts at the beginning of 2017, due to the expected development and also to the accumulation of inflationary pressures. Calculated on the basis of steady taxes, the annual inflation rate will reach 3.3% at the end of this year, 3.1% at the end of next year and 2.9% at the end of projection. It’s hard to see it through when there are so many tax cuts, to put them aside and see what level will the inflation reach,” Governor of the National Bank of Romania (BNR) Mugur Isarescu
Trying to explain the current trend, the BNR Governor said: “We are facing pressures for RON’s depreciation, as the Hungarians and Poles face, the only currency in the region to register an appreciation is the Czech Krona. The trend is associated to the balance of payments. We have higher imports than exports, whereas the imports growth speed is higher than the one of exports. Although this deficit is partially covered by capital and European funds inflows, there is a problem,” Mugur Isarescu said.
The National Statistics Institute (INS) has announced on Thursday that the trade deficit has increased by almost EUR 1.96 billion in the first nine months of 2017, up to an overall deficit of EUR 8.8 billion.