IMF: Romania Central Bank May Need To Adjust Monetary Policy

05.09.2011 By Florentina Dragu

The Romanian central bank may need to adjust its monetary policies to tackle rising food and fuel prices and reach its inflation target for 2012, an official of the International Monetary Fund said Monday.

"The central bank must focus on the medium-term inflation targeting. We have to be sure that we are doing what it takes to lower the inflation in 2012," IMF mission chief Jeffrey Franks told a news conference in Bucharest.

Franks said consumer prices are likely to grow by over 5% in 2011.

"The central bank's forecast is of 5.1%, and our estimation is similar. However, the numbers depend also on the evolution of administered prices (…). Our best prognosis indicates an inflation peak by mid-year, followed by a downward trend," he added.

Franks said the higher inflation in 2011 is driven by elements outside the central bank's influence, including global energy and food prices, as well as administered prices on the local market.

Romanian central bank recently revised upward its forecast on the annual inflation to 5.1% in 2011 and 3.6% in 2012, from 3.6% and 3.2%, respectively. However, the bank maintained unchanged its inflation target for both years, at 3%, plus/minus one percentage point variation around the band.