Inflation could start going up next year, masked by the VAT cut and due to the growing consumption. The generous measures taken by the Government, given that parliamentary elections take place next year, as well as the new wages in the public sector, could further fuel the inflationary pressures, according to the BCR analysts.

Romania’s National Bank (BNR) will maintain the monetary policy interest rate at the current level until the last months of the next year, given an inflation which remains low due to the VAT cut from 24% to 20%. BNR will most probably increase the monetary policy interest rate no later than the fourth quarter of next year, considering that the fiscal easing will continue in 2017, according to the BCR analysts.

The Central Bank decided this week to maintain the policy rate at the current level of 1.75% per year, as Romania’s annual inflation rate has been negative in the last three months, due to the VAT rate cut on food from 24% to 9% starting June 1, 2015.

editor@romania-insider.com