“Inflationary pressures remain. We have won a battle, not the war. Production costs have increased and need to be counterbalanced with productivity. Energy costs and labor costs have increased. In time, they can be digested by the economy and society but the central bank is obligated to warn about them. These are fundamental balances that we need to keep,” central bank governor Mugur Isarescu said at the presentation of the central bank’s inflation report.
Romania’s central bank sees the annual inflation rate declining in the third quarter, remaining above the variation band of the target, before dropping more visibly in the final months of 2018 towards the upper bound of the 1.5%-3.5% target band.
It expects inflation to remain within the target variation band in the next two years, save for external shocks, said Isarescu.
The central bank also revised the 2019 year-end inflation forecast to 2.7% from a previous projection of 3%.