UniCredit: Romanian Central Bank Likely To Miss 2012 Inflation Target

In its latest forecast report for the central and eastern Europe, UniCredit said the annual rate could fall bellow 3% in April 2012, from 3.4% last month. However, the deceleration will only be temporarily and inflation will rise again in the second half of 2012, the bank said.

UniCredit expects the Romanian leu to trade between 4.3 and 4.4 units per euro throughout 2012, with higher levels tested in case of extreme risk aversion and lower levels possible if the foreign currency supply improves on the local market.

“While denying any ceiling for the RON/EUR pair, the central bank is unlikely to let the leu depreciate above 4.4 per euro for more than a few days, since it fears that the forex loan portfolio (especially consumer loans and loans to SMEs) will deteriorate further,” the report noted.