The new scenario of the projection points to prospects for a pick-up in the annual inflation rate in the months ahead, followed by a slowdown starting with the latter part of 2018. Compared with the previous Inflation Report, the path of the forecast annual inflation rate has been revised upwards in the short run, mainly due to the relative strengthening of recent and anticipated inflationary effects of supply-side factors, as well as to pressures from fundamentals, the bank said.
The uncertainties and risks surrounding this outlook stem primarily from the fiscal and income policy stance, labor market conditions, as well as from developments in administered prices.
The central bank currently forecasts inflation at 3.9% in the first quarter of 2018, 3.8% in the second quarter, 3.5% in the third quarter, and 3.2% in the fourth quarter. The central bank maintains its inflation target at 1.5%-3.5% for 2018.
At its monetary policy meting Wednesday, the central bank decided to raise its benchmark interest rate to 2.25% a year from a previous 2%. It also raised the interest for its deposit facility to 1.25% from 1% and the interest for its lending facility to 3.25% from 3%, applicable as of February 8. kept minimum reserve requirements on foreign currency liabilities and for leu deposits unchanged at 8%.