Next year's budget is the main internal risk for the inflation rate evolution, said Romania’s National Bank (BNR) governor Mugur Isarescu.

The Parliament will discuss today a draft law on increasing salaries in healthcare and education. The expenditure could increase the budget deficit to over 4% of the GDP, based on the Government’s estimates.

“BNR’s main objective is macroeconomic stability. (...) The construction of the 2017 budget has an important part. The manner in which the newly adopted laws as well as the existing ones will be incorporated is not known,” Isarescu added.

The central bank expects inflation to remain in negative territory until December 2016 and return to around 1.75% by mid-2017.

BNR’s board maintained the monetary policy interest rate at 1.75% in last week’s meeting.

editor@romania-insider.com