The NBR expects the inflation rate to reach a level of 4.3% in Q1, climb to 4.7% in Q3, settle at 4.6% by the yearend, and stay there in Q1, 2008, as well. In addition, according to the latest quarterly report on inflation, next year the rate of inflation is projected to decrease to a level of 4.1%.

This is the first time the central bank has published the exact projected levels of inflation. NBRes board of governors is due to meet on March 26th, for a new monetary policy evaluation, and then on May 2nd for discussion on the inflation report for the next quarter.

Unlike other central banks in the region, the NBRes board is not yet willing to reveal the voting structure for decisions related to interest rate movements or to have any minutes published from meetings.

"Until we see a better NBR-market agreement, we will not publish the minutes," said NBR governor, Mugur Isarescu.

The NBR considers the greatest risk to a continued disinflation is "an increase in wages uncorrelated with the labour productivity". Isarescu does not fear private sector salary increases, but sees "the grave danger" as residing in the budgetary sector, given the significant needs particularly in the heath care and education sectors.

According to the NBR estimates, included in the latest quarterly report on inflation, "it is possible" that in many sectors of the economy companies registered a high profitability rate in 2006, which would allow them to not transfer salary raises into prices.

Another risk to disinflation is the budget deficit, which is expected to widen even further than the announced target of 2.8% of the GDP.

Speaking on possible risks, he also mentions a widening gap between savings and investments, as well as uncertainties linked to the future development of the exchange rate.

According to the Report on inflation, the NBR based it