Romanian Ctrl Bk Should Further Tighten Monetary Policy-IMF

“We believe, given the negative inflation surprises in recent months, more monetary tightening, primarily interest rates, may be needed,” said mission chief Albert Jaeger, presenting the conclusions of an IMF mission in Bucharest.

In March, Romania’s inflation accelerated 0.67% on the month, taking the annual rate to 8.63%, its highest level since January 2006, as a result of higher telecom and fuel prices.

The IMF expects the country’s 2008 headline inflation to stand at 6.5% by yearend and go back to the central bank’s target range “with some delay” in 2009, Jaeger said.

The Romanian Central Bank has set an inflation target of 2.8%-4.8% for 2008, but expects it at 5.9% by yearend. For 2009, the bank has set a target range of 2.5%-4.5%.

The bank has raised its key monetary policy rate four times over the past five months, to 9.5% from 7%, in an attempt to curb rising inflation.