According to the National Bank's baseline scenario, inflation will gradually return to its target. Specifically, in the first half of 2020, inflation will remain above the 3 percent target, driven by increased contributions to inflation and intermediate costs due to the recent exchange rate depreciation.
However, according to the NBG, inflation is expected to fall further than the target in the second half of 2020, driven by tighter monetary policy.
"In the medium term, improved economic activity and a reduction in the effect of an effective exchange rate will help bring inflation closer to its target," the National Bank said.
In order to halt inflation in 2019, the National Bank increased the monetary policy rate to 9 percent.