Olteanu: the effect of VAT drop on inflation will disappear
The drop in the quota of VAT from 24% to 20% will lead to the slowing down of the rate of inflation on a short term, but the prices of consumption could go up again starting next year, with the apparition of the effect , stated the vicegovernor of BNR Bogdan Oltean.
Premier Victor Ponta announced recently that the executive intends to decide in April to the reduction, starting \june of the \VAT stabilising on a variant.
According to Olteanu, BRD will adopt a policy of expectation and anchorage of inflation, concentrating on the counterattack of some potential effects to the second round as a result of the cut in taxes.
BNR reduced the rate of the key interest for the sixth time, at a session; at a minimum record of 2%p per year from2..25% per year in February, could adopt the same attitude as five years before, when the government decide to increase the vat by five percentage points at the present level of 24%.
The BNR policy was to keep to the key interest as such at the level of 6.25% for one year and a half.The governor Mugur Isarescu stated on Tuesday that the monetary policy does not mean only the key interest but includes the instalments of compulsory minimum reserves for the liabilities in lei and foreign currency and the symmetrical corridor, suggesting that the central bank could continue the relaxation on this level.
Isarescu showed that the trend of inflation will influence the following decisions of the board of the BNR regarding the monetary policy but they depend on other factors, such as the decisions of fiscal policy.
According to Olteanu, the decisions of monetary policy of BNR will be based in the future on the projections on long term regarding the inflation and less on the temporary drops in prices.
BNR modified the prognosis of inflation for this year, from 2.2% to 2.1% and has an estimate of 2.4% for inflation since the end of 2016.
In February, the annual rate of inflation dropped at a historic minimum of 0.4% as the prices go down for food and energy. The data for March will be published on 10 April.