|2023/02/06 / Erste Group Research|
Romania Special | Inflation Forecast Update
We revise down year-end inflation forecast amid declining soft commodity futures prices and lower energy prices. Inflationary pressures should ease after the first quarter, due to favourable energy-related statistical base effect. We see NBR holding key rate steady at 7.00% throughout 2023. Persistent and broad-based features of the current high inflation suggests that it should not decline quickly and hence upside risks to inflation trajectory remain.
Lower inflation outlook is mostly priced into ROMGBs, in our view. At the same time, a significant deceleration in inflation should imply higher ‘two-way flexibility’ on FX. The NBR already signalled its discomfort with RON strengthening by loosening money market liquidity management.
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|Author||Erste Group Research|
|Product name||CEE Economies Special Report|
|Topic in focus||FX, Macro/ Fixed income|
|Economy in focus||Romania|
|Currency in focus||Romanian Leu|
|Sector in focus||-|
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