NBR review: Non-event confirmed

The CPI outlook was revised lower “to end this year slightly above the variation band of the target, before returning and staying in the upper half of the band until the end of the forecast horizon”. This was already known from the previous NBR meeting. The press release notes that the recent decline in CPI was due to non-core components such as “vegetable prices, administered prices and fuel prices”, while core inflation inched up to 3.4% year-on-year at the end of September due to “international agri-food prices” and “significant demand-pull and wage cost-push inflationary pressures”. The NBR Board remains concerned about developments in the current account but notes some signs of moderation in the trade balance widening.

The Q&A section of the press briefing was really brief. NBR Governor Mugur Isarescu suggested that there is no need for rate hikes ahead, in line with the market consensus. He reiterated the call for containing fiscal slippages followed by a gradual adjustment, with no negative impact on economic growth.