Inflation rate on the wane

The inflation rate could drop below 4% in Romania, the National Bank reports

Corina Cristea, 05.07.2019, 13:55

Elected for a new five-year term at
the helm of the National Bank of Romania, a position he has held since 1990,
Governor Mugur Isarescu gave assurances the Central Bank will see that
Romania’s inflation rate is kept in check, below the 10% mark. This is more
than a commitment, Isarescu says, arguing that despite the impression created by
the difficult economic context, hard facts show that the inflation rate in June
could drop below 4%. The Central Bank on Thursday decided to maintain the monetary
policy interest rate at 2.5%. Mugur Isarescu says the time has come for
economic growth to stop being consumption-driven.

Over the coming period the main challenge is to ensure
economic growth while implementing fiscal consolidation measures. That is
mainly because so far growth has been stimulated by boosting consumption. That
gap is closing now and the question will arise – how will the economy grow?

Economic analyst Cornel Cojocaru
says the latest news from the Central Bank is good:

Basically, the monetary policy interest rate has been
2.5% for almost a year. The reason behind it, as the Central Bank has shown, is
in part a stabilizing trend in the average price hike rate. This is good,
because we are on the verge of seeing abrupt spikes in the average inflation
rate from one year to the next. In that respect, the National Bank estimates a
drop below 4% in June. What is certain, to citizens, investors and
entrepreneurs alike, is that the inflation rate will probably average at 3.5% -
4% by the end of the year. It’s good news, because this is indicative of a
stable economy.

The National Bank of Romania will
preserve a prudent and responsible policy, its long-term goal being Eurozone
accession, Governor Isarescu added. The Romanian official says Romania must
prepare well in advance to join the Eurozone, considering the significant
development gaps between our country and Eurozone states.

(Translated by V. Palcu)