OREANDA-NEWS. May 12, 2010. This was announced by the NBM president during the presentation of the second monetary policy report, issued last week. As it is known, the National Bank plans medium term inflation (2010-2012) at a rate of 5% + /- 1%. At the same time, the forecast made in the first monetary policy report published in February this year, was 6.5% and according to the forecasts updated by the National Bank in May, the price growth in 2010 will amount to 10,8%.

At the same time, by the end of the year, it is expected to equalize situation with projected inflation of 6% by 2011. According to the NBM, the inflationary pressure in 2010 is caused by the growth in regulated prices, prices for fuels and the foodstuff and is not the result of consumption. Dragutanu stated that non-monetary inflation factors are not under the control of the NBM and solutions in the field of monetary policy did not have a direct impact on them. At the same time, these factors will have a temporary effect and the consumer price indexes will return within the defined interval in the second half of 2011.

The NBM president also noted that the National Bank strives to create an economic environment with low inflation, assuming an adequate inflation rate of 5% +/-1% in the post-crisis period. At the same time, he stressed that the National Bank does not intend to take harsh measures to achieve the certain level of inflation till the end of the year, as this will negatively affect the national economy. Dorin Dragutanu also emphasized that the inflation of 10% should not be regarded as tragedy for the country, because the situation is under control and will soon normalize.

He noted that the NBM forecast contains a number of risks that may affect the actual size of inflation. Among them he noted: higher growth in international prices for energy, raw materials and foodstuffs as well as unanticipated increase in indirect taxes and regulated prices. At the same time, a lower level of inflation can be the result of slower recovery of the international economy, possible adverse effects as a result of fiscal problems in some European countries, reduced domestic demand and investment, and the suspension of external funding.