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ING reduced its estimate of inflation in Romania for 2015 and 2016

ING reduced its inflation estimation for Romania for the next two years: by 0.2 percentage points to 0.7 percent – 2015 and 1.2 percent – 2016, respectively.

As regards, bank’s forecast for 2017 was raised by 0.6 points, to 2, 7 percent, the main reason being the change expectations of oil prices.

Annual inflation in October of -1.64 percent is beyond ING expectations, of -1.7 percent, due to vegetables’ price volatility, reflecting the drought impact.

The dynamics of food prices remains strongly influenced by the VAT cut, the effect of this measure will disappear from the statistics in June 2016.

The bank anticipates that the lowering of the standard VAT rate by 4 percentage points to 20 percent in January 2016, will keep the inflation outlook at low level for a long period.

According to ING, National Bank of Romania (BNR) will continue the loose monetary policy and will reduce the reserve requirement in local currency by 6 percentage points (in three stages), 2 percent in 2016, thus resulting liquidities of RON 9 billion.

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