BUCHAREST: Romania’s central bank revised its inflation forecast for this year slightly upwards to 3.6 per cent on Wednesday while the bank’s governor said monetary policy should be restrictive enough to curb excessive demand and inflation expectations.
The new forecast is slightly above the bank’s 1.5-3.5 per cent target, but sharply lower than the 5 per cent annual inflation figure recorded in March, the highest in the region.
Inflation has been heightened by higher energy and fuels prices and consumption-friendly wage hikes in the import-reliant European Union member state.
Bank governor Mugur Isarescu said that while April inflation will surge because of higher tobacco excise duties, price growth will then linger at around 5 per cent until the start of October.
The bank expects inflation to slow down further to 3.0 per cent at the end of 2019, a shade lower than its previous forecast of 3.1 per cent.
Earlier this week, the bank delivered the third hike this year to its benchmark interest rate bringing it to 2.50 per cent. Isarescu said the central bank planned to maintain a gap between its interest rate and the inflation rate.
The governor added that consumer confidence in Romania is on a sliding path, reflecting inflationary expectations and caution.
