ING lowers inflation forecast for Romania to 5.7%

ING Bank Romania has revised its inflation forecast for end-2009 down to 5.7% from 6.3%, due to steeper-than-expected economic contraction and enhanced stability in the exchange rate than initially anticipated.
The annual inflation rate fell in July to 5.06%, in line with forecasts, while compared to June, consumer prices dropped 0.07%.

July inflation rate of 5.06% was the highest of all EU members.

NBR’s latest inflation projection indicates an annual rate of 4.3% at year-end, slightly down from its initial forecast. NBR targets an annual inflation rate of 3.5% with +/-1%tolerance band.

“The central bank might be too optimistic with its inflation forecasts for both 2009 and 2010. We remain negative on inflation developments because of the strong persistence seen so far and significant risks about the outlook”, ING said in its report. For 2010, the bank expects inflation rate to stay in the range of 5.5%.

The National Bank of Romania has lowered its inflation forecast for end-2010 from 2.8% to 2.6% as the target or next year was set at 3.5%, +/-1% tolerance band.

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