Prima pagină » English » Romania Central Bank Says Inflation May Rise To 8% In 2010

Romania Central Bank Says Inflation May Rise To 8% In 2010

Romanian inflation may accelerate to around 8% this year, driven by a recent increase in the value added tax level, central bank governor Mugur Isarescu said Monday.
Romania Central Bank Says Inflation May Rise To 8% In 2010
05 iul. 2010, 13:49, English

„The latest estimations on the overall effects (of the VAT increase – e.n.) show that the year-end inflation will come in at around 8%,” Isarescu told an economic seminar.

Isarescu said the figures on the annual inflation are not definitive yet, but they were sent to the International Monetary Fund for examination, under the terms of a EUR13 billion loan agreement signed with the Washington-based institution.

Friday, the IMF revised its target on Romania’s annual inflation to 7.9% in 2010 from 3.5% previously, following the enforcement of a five percentage point increase in the sales tax rate to 24%.

Earlier today, Romanian central bank’s deputy governor Cristian Popa said the higher tax is likely to drive inflation up by three to four percentage points over the next period, from 4.4% end May.

Last week, the central bank decided to leave its key rate unchanged at 6.25%, in a move to continue the disinflation process and sustain private lending. The bank pledged to limit the second-wave effects triggered by the higher taxes.