Romania 2010 Inflation Unlikely To Exceed 6% After Tax Hike – BRD

„The VAT increase will not have a severe impact on prices, given that the tax level stays unchanged for many categories of prices. The most likely scenario is (an annual inflation of) 5% to 6%,” said Florian Libocor, chief economist at BRD.

Speaking at the „Mediafax Talks about Banking” seminar, Libocor said Romanians should be informed correctly about certain economic events, such as the effects of a possible delay in the country’s loan agreement with the International Monetary Fund.

Romania found itself in a delicate position recently, after the country’s top court rejected part of a key austerity pack adopted by the government, raising concern about the political scene and endangering the continuity of a EUR13 billion loan agreement with the IMF.

The news pushed the leu to record lows against the euro and spooked households into a selloff.

„The messages conveyed to the public should be as correct as possible to avoid situations such as the one that took place last week, when the households erroneously bought euros,” Libocor said.

„The leu is not falling, it just went through a period of high volatility amid a tensioned period,” he added.

According to the BRD’s official, the leu’s exchange rate will stabilize around 4.1/4.3 units per euro.