Citibank: Romania's Yr-End Inflation At 6.8%, Above Ctrl Bk Target

Publish date: 02-08-2008
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Citibank sees Romania's inflation at 6.8% at the end of December, two percentage points higher compared with the central bank's target of 2.8%-4.8%, on continued pressures from local demand.

"The shocks on the supply side and the pressures coming from local demand continue to threaten the perspectives regarding inflation, Citibank analyst Ilker Domac said in a report.

The analyst welcomed the National Bank of Romania's decision to increase the key monetary policy rate by 25 basis points to 10.25%, in its seventh consecutive hike since October last year.

"We reiterate the fact that the economic overheating, the high inflationary pressures and the weak support from the fiscal policy are arguments for continuing the process of tightening the monetary policy. Therefore, we do not exclude further interest rate increases this year, which may reach 10.5% or even exceed this level by the end of the year," Domac said.

Romanian inflation slowed to 0.28% on the month in June, due to a moderate increase in food and non-food prices, but annual inflation was 8.61%, just below a two-year high of 8.63% in March.


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