April 5 (SeeNews) - Romania's central bank, BNR, said on Wednesday it expects annual inflation to remain below its target of 1.5%-3.5% in the next months, and that it is ready to cut the minimum reserve requirements when needed.
BNR will release its quarterly inflation forecast on May 5.
"The most recent assessments reconfirm the outlook for the annual inflation rate to stick to a slightly upward path in the following months, while remaining significantly below the lower bound of the variation band of the flat target," central bak governor Mugur Isarescu said, as quoted by BNR in a statement.
This is in line with the annual inflation rate trajectory shown by the latest medium-term forecast, published in the February inflation report, BNR said.
In its latest inflation report issued in February , BNR lowered its 2017 inflation forecast to 1.7% from previously projected 2.1% and said that that it expects changes in its key rate by the of next year.
Romania's annual inflation accelerated to 0.2% in February from 0.1% in January.
The uncertainties and risks surrounding the inflation outlook stem from both domestic and external sources, the bank added.
Domestically, the risks arise primarily from the evolution of fiscal and income policies in 2017, as well as from the uncertainties regarding the future adjustments in administered prices - especially those related to the energy market deregulation –, whose developments may differ from the initial assessments, the release showed.
Looking at the external environment, risks stem mainly from the uncertainty surrounding economic growth and inflation developments in the euro area, regionally and globally, as well as from the fluctuations in international oil prices.
BNR maintained on Wednesday its monetary policy rate at a record low 1.75%. The central bank last changed the key rate in May 2015, when it cut it by 25 basis points.
The bank also decided to retain the minimum reserve requirement ratios on both leu and foreign currency-denominated deposits at 8% and 10% respectively.
However, Isarescu said that the bank would cut minimum reserve requirements for hard currency every time it has possibility to do so.
"We have made giant steps have been made so far to bring minimum reserve requirements for hard currency towards EU levels. We will cut the reserve requirements each time we have the possibility," the governor said.
(1 euro=4.5416 lei)