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Isarescu: Central bank revises downward target range for 2010 inflation

The inflation target for 2010 was set at 3.5% with a tolerance band of +/-1%, hence confirming the projections used by central bank since February 2009, said the governor of National Bank of Romania, Mugur Isarescu.

The regulator has revised downward the projection for 2010 inflation, from 3.2% to 2.8%, as the forecast range for next year was set at 3.5% with +/-1% tolerance band. The reduction of local currency devaluation risk and the contraction of consumer demand sent the inflation target range for 2009 to 4.4% from 4.5%, said Mugur Isarescu. The central bank has also cut inflation forecasts for yearend down to 4.4% from 4.5%.

"NBR thinks the market conditions encourage a fast-track disinflation compared to previous period. The uncertainty interval remains relatively high, even it has diminished compared to prior projections, and the uncertainty interval lays in the possibility of a breach of the inferior level of the forecast range," said Isarescu.

The governor added NBR has enough reasons to think that "disinflation has comfortably installed for the coming two quarters" and indicated that currency devaluation was the main driver of high inflation in first quarter.

"In first quarter, both Romanian economy and inflation paid the price for an inevitable adjustment of the deficit," Isarescu stressed. The factors feeding the disinflationary process are the evolution of food products, after a prolific year in agriculture and the reduction of nominal prices for imports, excluding the evolution of currency exchange rates, NBR governor continued.

Peak Of Pressures Upon Leu Is Gone

The peak of speculative and non-speculative pressures upon the Romanian leu has passed, and the salary and fiscal policies are both much more adequate than in the past period, central bank governor Mugur Isarescu said Thursday.Isarescu said the rapid alleviation of the leu depreciation risks is grounded on the quick adjustment of the external imbalances, which was even quicker than the central bank expected, even if they did not reach sustainable longer-term levels.Not only the exchange rate had an impact on the external deficit decrease, but also the domestic demand deceleration, Isarescu also said. Moreover, the arrangement with the International Monetary Fund, the European Union and other international financial institutions also helped reduce pressures on the leu-euro exchange rate. Isarescu also said that all the international forecasts show a persistence of the crisis, alongside a reduced global demand, with a significant impact on the Romanian economy.

 

Sursa: http://www.actmedia.eu

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