* Inflation risks persist in the medium term
The NBR has remained consistent and has kept the key rate at 6.25%, as well as the current levels of the minimal mandatory reserves for assets denominated in lei and in foreign currencies, thus confirming analyst expectations, according to the decision of the Board of Directors of the NBR, made in yesterday"s meeting.
The communiqué of the NBR states: "The monetary policy is aimed at maintaining an ensemble of real monetary policies in a broad sense adequate for a stabilization of inflationary expectations and or consolidating the convergence of the interest rates towards the targets set for the medium term".
The medium term inflation outlook has improved as a result of the dissipation of the first round effect of the VAT hike, due to the relief of tensions on the international market for food commodities and due to an expected favorable impact of the domestic agricultural supply, in line with the forecasts of the NBR. Still, the Central Bank warns that in the medium term, risks concerning inflation remain significant. The source of these risks comes from the schedule and the size of the managed prices, the volatility of capital flows, in the context of the potential evolutions of the sovereign debt crisis in the European Union and the United States, as well as the uncertainty on the price of commodities on the international markets, the press release states.
The annual inflation rate fell in June to 7.93%, from 8.34%, as a result of the fall in the volatile food prices. On the other hand, the annual rate of the base inflation rate, measured by the CORE2 adjusted rate, has remained at a level of 4.7%, a level which was recorded ever since the month of April of 2011. The deceleration of inflation was prevented by the inertia of the propagation of the previous adverse shocks and by the presence
