The Romanian National Bank (BNR) has reduced the annual inflation rate forecast for this year from 2.1% to 0%. The VAT cut from 24% to 9% on food has triggered the revision, said Mugur Isarescu, governor of the Central Bank.

The inflation rate will reach over 1.5% in the last quarter of the next year.

Keeping the inflation rate close to zero in the next year will help stimulate lending via monetary policy decisions, said Isarescu.

During summer, Romania could even witness negative inflation – or deflation, and Romanians would benefit from lowering prices.

In February, BNR reduced the inflation prognosis from 2.2% to 2.1% for this year, after it had revised it down from 3% in November last year.

editor@romania-insider.com