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BNR Governor: Average annual inflation rate could drop towards 5% in August

The average annual inflation rate in Romania in August will drop towards 5 percent, while the monthly inflation rate could get under 4 percent at the beginning of October, National Bank of Romania (BNR) Governor Mugur Isarescu told a specialized press conference on Friday.

'We have been talking about inflation for 20 years and we have not exhausted the topic. Unfortunately, for about one year, since the VAT issue, the specialists and the population have focused on the annual inflation rate and overlooked the other important indicators. It is good to take a look at all indicators, because if you look at the annual rate, at the pace the prices go up, it is clear that inflation in Romania stood high because of certain monthly shocks, such as the VAT or the tobacco excise. These shocks aside, we have recently registered a relative stability in the inflation rate somewhere between 0.8 percent and 0.4 percent and the forecasts should be based around these figures. The average annual inflation rate is the average of the past 12 months. I estimate it will drop towards 5 percent in August and we shall not take the last place in Europe anymore,' Isarescu mentioned. The BNR official added that the inflation source was not caused by demand, but by the tobacco excise, which has a large share in the Consumer Prices Index (CPI), forwarding the hypothesis that in October the average monthly inflation rate in Romania could get under 4 percent.

'I do not rule out the possibility of having an inflation rate standing under 4 percent, the lower forecast, in October, when the CPI report for September is released. We can talk about a 1.02 percent monthly average. The only lesson that we can learn is that volatile prices are extremely volatile, that is why they are named this way. The other possibility would be an increase up to the level registered in May or June, namely 0.2 percent. A monthly inflation rate standing at 0.2 percent was also registered in the period 2007-2010. The inflation rate in September will most probably stand somewhere between 3.8 percent and 5 percent, so somewhere around 4 percent,' the BNR Governor said.

According to the data released on Thursday by the European Office of Statistics (Eurostat) the month of June 2011 was the 11th consecutive month in which Romania registered the highest annual inflation rate in the European Union, that is 8 percent, followed in a distance by Estonia - 4.9 percent, and Lithuania - 4.8 percent.

On the other hand, the data supplied by the National Institute of Statistics (INS) show that the Consumer Price Index in Romania decreased 0.29 in June compared with May, the annual inflation rate reaching 7.93 percent, Agerpres informs.

Isarescu expects leu credit interests to drop

National Bank of Romania (BNR) Governor Mugur Isarescu told Friday's debates on the inflation that he expects the interests on the national leu currency credit to drop towards the BNR key rate, provided the banks have confidence 'in overcoming this inflation-related impasse'.

Isarescu stressed the Central Bank has been keeping the key interest rate at the same level for some time. 'Why should we raise it? /.../ A correct treatment is a constant one. Poland, for instance, keept the official interest rate unchanged at nearly 40 percent longer than us. We should keep it another six or seven months, so as to follow the Polish example of maintaining the interest rate', he stressed.

The BNR head also recalled the time when the Bank had kept the key interest rate high and 'the markets went crazy'. The BNR Board of Directors, at a meeting on this May 3, decided to keep the key rate at 6.25 percent per annum, to conduct an adequate management of the banking system liquidity and to maintain the current levels of the minimum mandatory reserve rates applicable to the crediting institutions' leu- and forex liabilities.

The Central Bank on Friday organised round table debates on About the Inflation, Again as part of a range of meetings called Mugur Isarescu and Guests.

The guests of this debate were Sergiu Oprescu, Alpha Bank executive president, Catalin Rasvan Radu, Unicredit Tiriac Bank executive president, Petre Tulin, Banca Comerciala Feroviara (Commercial Railway Bank) managing director and Lucian Croitoru, advisor to the BNR governor.

Sursa: http://www.actmedia.eu

Tags: percent inflation romania monthly isarescu towards could governor average annual bnr

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