ING Bank estimates the annual inflation will exceed 4.5% in late 2014, well above the upper-end of the central bank’s target range of 1.5%-3.5%.
“The inflation will clearly be above estimations, both of the market and those of the central bank,” ING Bank Romania’s chief economist Vlad Muscalu told the Coface Country Risk conference.
He said the central bank will probably revise upward its forecast for the year-end inflation during the next monetary policy meeting in May, considering “the negative events in the first quarter, the prospects for price normalization in the food segment and a sharp adjustment of regulated prices.”
Moreover, the bank could also increase its main lending rate because of higher inflationary pressures, Muscalu said.
Romania’s annual inflation eased to a record low of 1.05% in February, reflecting a 2.2% annual decline in food prices.
The central bank recently revised its year-end forecast to 3.5% from 3% previously, citing external uncertainties and upside pressure from higher excise duties.