“As for future macroeconomic developments, Board members showed that the updated assessments indicated a renewed considerable worsening of the inflation outlook across the entire forecast horizon,” the Board says in the minutes of the monetary policy meeting of Romania’s central bank.
“Specifically, the annual inflation rate was expected to accelerate its growth in the second quarter of 2022 – to 14.2% in June versus 11.2% in the earlier projection – and decline only mildly in the next four quarters, to stand at 12.5% percent in December 2022 and 12.4% in June 2023, well above the previously-forecasted 9.6% and 5.0% respectively.
At the same time, after a relatively steep downward adjustment probably witnessed subsequently due to sizeable base effects, it was anticipated to decrease progressively and remain at 6.2% at the end of the projection horizon, significantly above the variation band of the target and the February forecast of 3.2%.”
The central bank also says that any potential attempt on its part ”to ward off the particularly strong direct and indirect inflationary effects of adverse supply-side shocks would be not only ineffective, but even counterproductive, in view of the sizeable losses it would cause to economic activity and employment over a longer horizon.”