The Romanian National Bank (NBR) yesterday revised the inflation forecast downward, for the end of the year, from 5.1% to 4.6%, and the one for 2012, from 3.6% to 3.5%, Mugur Isărescu, the governor of the NBR, upon presenting the quarterly inflation report.

He said: "Inflation data is beginning to look better and we are hoping that at least during this summer period there will be substantial improvements".

The NBR governor added that the economy has exited the recession, and processing industry figures are nearing pre-crisis levels, similar to the regional trends.

Starting with the months of May and June we have had "a very strong correction" of volatile prices, and the persistence of the demand deficit helps lower inflation, he claims.

Mugur Isărescu said: "Consumption is still lagging. (...) The volume of consumer loans of the population remains low, which means that they are focusing on repaying their loans and second of all, that they are reluctant to borrow again".

As for the exchange rate, he said that volatility has increased since the beginning of the year, but it is still lower than that of the Polish zloty or of the Hungarian forint.

The NBR governor said: "The increase in volatility seems to be pretty strongly connected to the risk premium. We have seen a slight increase as worries of a crisis in a Eurozone have increased. Over these past few days we are seeing an extenuation".

He said that the possible reasons why the inflation target has deviated from the projected trajectory remain the evolution of the economy in the Eurozone and the sovereign debt crisis. Furthermore, others risks could come from the prices of commodities, (particularly oil) and foodstuffs on the international markets, as well as the from the Euro/dollar exchange rate.

The governor of the NBR said: "We are seeing slightly higher outside p