The central bank board on Tuesday examined and approved the November 2017 Inflation Report, which incorporates the most recent data and information available. The new scenario of the projection points to prospects for a significant pick-up in inflation over the short time horizon, followed by its slowdown starting with the final quarter of 2018.
Thus, compared to the previous Inflation Report, the path of the forecast annual inflation rate has been revised markedly upwards in the short run, almost exclusively due to the recent and anticipated action of some supply-side factors, and slightly downwards over the second segment of the projection horizon.
The central bank governor did not give the revised inflation projection figures, which will be released on November 9.
“We expect a statistical peak in inflation in the first quarter of 2018 because the rate was very low in the first quarter of 2017. It’s no use to take measures that shake the economy but we will intervene if that peak is not just statistical,” said Isarescu.
The central bank board on Tuesday decided to narrow its standing facilities corridor by an additional 25 basis points, to +/-1 percentage point from +/-1.25 percentage points, and kept its benchmark interest rate unchanged at a record low 1.75% a year.
Starting November 8, the central bank will raise its interest for deposit facilities to 0.75% a year from 0.5% and will lower the lending facility interest to 2.75% from 3%.