Romania's central bank on Wednesday downgraded its inflation forecasts for this year and 2014. The revision mainly reflects lower contributions from the main components of the consumer basket.

According to the revised estimate, consumer price inflation is forecast to be 3.1 percent at the end of the year, lower than 3.2 percent the bank had estimated earlier, and to stay within the central bank's target range of 1.5-3.5 percent.

The outlook for 2014 has been revised down to 3.1 percent from 3.2 percent forecast earlier in May. Inflation is then seen hitting a low of 2.1 percent in the first quarter of 2014, and then moving up to reach 3.3 percent in the first half of 2015.

The downward revision reflects lower contributions from administered price dynamics and the adjusted core inflation, as well as from fuel price dynamics for end-2014.

The bank further noted that Romania's economic growth will pick up markedly this year, after expanding modestly by 0.7 percent in 2012. Growth will be supported mainly by strong exports, which is seen significantly outpacing imports in the year as a whole.

At this month's meeting, the Board of the National Bank of Romania had lowered its benchmark interest rate to 4.5 percent from 5 percent, considering mainly the prospects of inflation staging a sustainable return to within the target band by the third quarter.

RTTNews