Romania’s National Bank (BNR) has revised down the inflation forecast for this year.

The inflation rate will remain negative throughout the year, said BNR governor Mugur Isarescu. In 2017 it will stay under the targeted level of 2.5%.

In May, BNR estimated a positive annual inflation rate of 0.6% at the end of this year. The central bank has revised its forecast because inflation at global and regional level remained low. This can affect the dynamic of volatile prices, as well as the administered prices, according to Isarescu.

The new prognosis keeps the upward trend, however, given the inflationary pressures. These are exerted by the excess of aggregate demand and the unit labor costs.

BNR’s board of directors decided yesterday to maintain the monetary policy interest rate at 1.75%, the lowest level in the past 26 years.

editor@romania-insider.com