The central bank board last week approved the quarterly inflation report. Its basic forecast scenario reconfirms the annual inflation rate will remain negative until December 2016 and will return to the bank’s target band mid-2017.
Romania’s annual inflation rate reached -0.6% in September, from -0.2% in August. Save for the temporary effects of a five-point cut in the country’s value-added tax rate, annual inflation would have reached 1% this year and 2.4% in 2017, said Isarescu.
Speaking about monetary policy, the central bank governor said the outcome of the US election will not affect monetary policy domestically or overseas and policy tightening is not likely. He did, however, caution over domestic risks to the state budget, endangered by populist measures ahead of the country’s Dec 11 parliamentary election.