ING: Romania Ctrl Bk Likely To Miss New CPI Targets

Tuesday, the central bank kept unchanged its 2012 inflation target at 3%, plus/minus one percentage point, and set a flat multiannual target of 2.5% as of 2013, again with one percentage point variation around the target.

Such ambitious targets are usually accompanied by harsh decisions to ensure the goals are achieved, the analysts at ING Bank said. However, the central bank is unlikely to take such restrictive action that could hurt economic activity and will probably miss its targets, they added.

"The central bank continues to express too much optimism regarding the inflation evolution. It's difficult to believe that inflation will be so low as the economy still needs structural adjustments, many of which will lead to higher prices," the report noted.

Romanian central bank recently revised upward its year-end inflation target to 7.8% in 2010 from 3.7% previously, following the introduction in July of a 5 percentage point increase in the sales tax to 24%.

The central bank was unable to reach its year-end inflation targets for the past three years.

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