November 10 (SeeNews) - Romania's central bank, BNR, on Thursday kept its 2016 inflation forecast for this year unchanged at -0.4% and raised its projection for next year to 2.1%, while leaving monetary policy options open for next period.
"For 2017, we have a minor revision by an additional 0.1 percentage points to 2.1%, due to a change in adjusted CORE 2 inflation", BNR governor Mugur Isarescu said in BNR's November inflation report.
The central bank's 2016 inflation target remained unchanged at 2.5% ±1 percentage point, BNR added.
According to Isarescu, without the impact of the round one of VAT rate reduction in 2015, inflation would have been 1% this year and 2.4% next year.
Romania's annual inflation rate turned negative in June 2015 after the scope of a 9% cut in VAT rate was expanded to include all food items, non-alcoholic beverages and food service activities. In addition, Romania cut its standard VAT rate from 24% to 20% from the start of 2016.
Romania's annual consumer price deflation accelerated to 0.6% in September from 0.2% in August, data from the statistics office, INS show.
In its previous inflation report in August, BNR said it sees annual inflation remaining in negative territory longer than previously expected, until the end of 2016. Romania's end-2015 deflation stood at 0.9%.
With regard to monetary policy, BNR said it is keeping options open, as the current environment is dominated by great uncertainty.
However, governor Isarescu said he does not expect a change in U.S. monetary policy "at the moment" following Republican candidate Donald Trump's victory in the presidential election.
On November 4, BNR maintained its monetary policy rate at a record low of 1.75%, in line with analysts' expectations. The bank last changed its monetary policy rate in May 2015, when it cut it by 25 basis points.
(1 euro=4.5000 lei)