Romania's central bank kept its monetary policy rate at 1,75 percent, unchanged since May 2015, but said inflation is forecast to run at a lower level and its rise will be slower than previously expected due to disinflationary supply-side shocks in recent months.
The board of the National Bank of Romania (NBR) approved the latest inflation report, which will be presented on Feb. 9, in which the baseline forecast remains for inflation to revert to positive territory in the first quarter of this year as the impact of the cut in Value-Added-Tax fades.
In its previous inflation forecast from November the NBR forecast 2017 inflation of 2.1 percent but since November there have been price cuts in automotive liability insurance, non-tax fees and charges have been scrapped and special excise duties on fuel were removed from Jan. 1.
The central bank said inflation is still on an upward path and should re-enter the target range by the end of this year and climb into the upper half at the start of 2018 to reach higher-than-previously forecast levels.
The NBR targets inflation at a midpoint of 2.5 percent within a range of 1.5 to 3.5 percent.
Romania's inflation rate turned negative in June last year due to the cut in VAT and hit a low of minus 3.5 percent in May but has risen since then and was minus 0.54 percent in December.
The National Bank of Romania issued the following statement: