IMF’s Franks: BNR Could Tighten Monetary Policy As Inflation Stays High

05.10.2011 ZF English

Romania’s central bank BNR might tighten the monetary policy in the coming months as the inflation will stay between 8% and 8.5% until July, Tuesday said Jeffrey Franks, chief of the International Monetary Fund delegation to Bucharest.

He said the central bank needs to remain vigilant. "A monetary policy tightening is possible in the near future but it's up to the central bank," Franks added.

According to IMF forecasts, Romania's annual inflation will stay above 8% in the coming months, but the rate will further drop significantly as the effects of the sales tax increase in July 2010 will dissipate.

On Tuesday, the Romanian statistics institute said the annual inflation rate rose to 8.34% in April, the highest since July 2008, after a 0.66% monthly increase in consumer prices.

Last week, the central bank kept its key monetary policy rate unchanged at 6.25% for the eighth consecutive meeting. It also revised upwards its forecast for 2011 inflation to 5.1%, from 3.6% previously.