Central bank has lowered inflation expectations

Mugur Isarescu, Romanian National Bank Governor, stated a high probability of year-end 2011 inflation falling below 3.3 per cent and also noted that the exchange rate depreciation of eastern European currencies was mainly a result of tensions in the euro-zone. This led to more competitive advantages of mentioned countries and probably a lower outflow of foreign direct investments in the future. Romanian National Bank (BNR) has enough reserves meaning it has a high reserve-import ratio to support the desired foreign exchange rate. A month ago BNR lowered it’s expectation on inflation from 4.6 per cent to 3.3 per cent in 2011 and from 3.5 per cent to 3.0 per cent in 2012. Subsequently the interest rates should fall as well if we don’t count in for the probable volatility due to difficulties of the euro-zone.

Source: Nineoclock