ING has thus lifted its inflation forecasts to 7% and mentions the fact that there are major risks over inflation, as Romania is also facing massive flooding from rain-swollen rivers, which could add another 1.2% to this year inflation rate and another 0.6% next year.
“If it thermal energy costs doubles, and we add the food price hike, another 2.4% could be added to the inflation rate and have a 9.4 – 9.5% rate at the end of the year”, said Nicolae Chidesciuc, senior economist at ING Bank Romania.
Fuel prices could also pose a considerable risk to the already swollen inflation, ING said in the report.
A high inflation rate could force the central bank lift its 2011 inflation target, and adopt “a reasonable one for 2012, such as 4-5% from 3% in 2011 – which is not realistic”.
Following central bank’s revision of the inflation rate for 2010 to 8% due to the VAT hike to 24%, ING expects the National Bank of Romania to increase the key rate to 6.75% in the third quarter and to 7% in the fourth quarter respectively.
ING also anticipates an increase in the monetary policy rate in the first quarter 2011 to 7.5%.
“We had to revise our moderately optimistic forecasts to a 3% GDP contraction in 2010, due to public wage cuts and VAT hike”, ING said.
In lipsa unui acord scris din partea InternetCorp, puteti prelua maxim 500 de caractere din acest articol daca precizati sursa si daca inserati vizibil linkul articolului ING does not rule out the likelihood of a 9.5% inflation rate.