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June inflation could drop below 4pct in Romania

June 2019 inflation in Romania may fall below 4pct, according to market data with the National Bank of Romania (BNR), BNR Governor Mugur Isarescu said on Thursday at a news conference.

"There will be no rampaging inflation in Romania, because we are here too. This statement is more than a commitment, it is to underscore that Romania has a central bank, but in a tumultuous environment talks can slip to such direction. But once again, the central bank is doing its job in Romania, and there will be no rampaging inflation at all. As you can see, we are talking about half a percentage points, one percentage point; at most one percentage point over the upper limits of our target. And now, if I was to say something not according to perception, but in consonance with the market data we have, you might have a pleasant surprise in a week's time, that is, June inflation might to drop below 4pct. And them such talks will calm down some," Isarescu said in response to a question by journalists about the odds for rampaging inflation.

Rampaging inflation would be in excess of 10pct.

Isarescu added that there is an excess of demand in Romania, which reflects on the current account deficit, that is, imports increase.

"Consumption has been overstimulated, that is what we have been saying over and over again in the last two years (...) There is a difference between perception and reality and the perception is that the exchange rate [of the local currency, the leu] against the euro should aim for 5 lei to the euro, but it tends to go down to 4.7 lei, because there are major capital inflows, which may mean that the interest rate gap is attractive enough, which does not necessarily makes the central bank happy," said Isarescu.

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