LV: Inflation puts euro adoption in danger in Latvia, Lithuania-ECB.

By bne IntelliNews May 31, 2012
The European Central Bank believes that inflation could postpone the euro adoption in Latvia and Lithuania, which are seen as the next countries to join the eurozone. ECB believes that for Latvia it will be hard to curb the inflationary pressures in the mid-term perspective due to limited options of maneuver given the fixed EUR/LVL exchange rate. Latvia's goal is to join the eurozone by 2014. According to ECB in April average 12-month inflation in Latvia was 4.1%, exceeding the benchmark of 3.1%. Currently Latvia's government is passing a number of inflation curbing measures, including cutting VAT by 1pps as of June 1 2012.

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