NBR set to vote on raised inflation forecast today

The board of directors of the central bank (NBR) is set to approve the quarterly report on inflation today, which will most likely include a raised forecast for this year’s inflation, while the benchmark interest rate and the level of banks’ minimum reserves will remain unchanged, as analysts believe.

While the upward revision of the inflation forecast for the end of this year is certain, about the new level there is just the indication that it will not exceed 5%, according to the statements NBR governor adviser Adrian Vasilescu made in mid-April. In February, the NBR marginally revised the inflation projection, from 3.4% to 3.6%. In March, annual inflation leapt, though, to 8.01%, beating all expectations.

NBR governor Mugur Isărescu stated in early April that the NBR would review the projection upwardly as inflationary pressures were not easing.

Many analysts have already significantly raised their inflation forecasts: Raiffeisen expects a 5.3% level instead of 4.5%, BCR believes inflation will stay at above 8% until July before dropping to 5.2% toward yearend, and ING estimates 5.7% for December. The market agrees the NBR is going to miss the inflation target, set at 3%, this year again.