“BNR agreed with the IMF experts on an annual inflation forecast of 3.7% for the end of this year, which is outside the target interval, as the impact of the administered price increases would be hard to counter by monetary policy measures without hitting the economic growth,” the sources said.
The central bank targets an annual inflation of 2.5% at the end of 2013, plus/minus one percentage point around the band.
In December 2012, the annual inflation rate came at 4.95%, above the targeted range of 2%-4%.
The bank has met its targets only two times in the eight years since the introduction of the inflation targeting policy.
The sources added the central bank also told the IMF that it wouldn’t cut the mandatory reserves this year, while the key rate is projected to stay at 5.25% over the next period.
An IMF team is currently in Bucharest for a review of the country’s progress under a EUR3.6 billion precautionary loan agreement.