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Romania Ctrl Bk Pledges To Keep Inflation Under Control – Governor

Romania’s central bank governor Mugur Isarescu said late Wednesday that the National Bank of Romania would take the necessary measures to keep inflation within this year’s target band of 2.8-4.8%.
Romania Ctrl Bk Pledges To Keep Inflation Under Control – Governor
31 ian. 2008, 10:37, English

Speaking at the national public television, Isarescu reaffirmed NBR’s commitment for price stability.

“We are fighting with steel swords to counter inflation. We will take the necessary measures, even if those are not pleasant. Sometimes they are viewed as major restrictions,” Isarescu said.

But the governor said there are a series of factors NBR cannot control, such as the rise of international oil prices and natural disasters like floods or drought.

In 2007, inflation ended at 6.57%, sharply above the central bank target of 3-5%.

Isarescu said there are a series of local factors that could endanger the inflation target for this year.

"An increasing demand for higher salaries above inflation and productivity is very dangerous,” Isarescu said, adding an “inflationary spiral”, very hard to control, could be created.

The banker said productivity is the generator of a better living standard.

"If productivity is not increasing, the feeling is awful. Inflation is the most unfair tax," Isarescu said.

The Romanian currency leu, which has recently touched a three-year low against the euro, is seen recovering in the following period. “The leu is in a comeback process after the strong depreciation in the last months,” Isarescu said, adding he maintains his confidence in the national currency.