Romania’s central banks takes interest in economic growth, but has in sight low inflation
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Romania’s central bank (BNR) takes care of the country’s economy but wishes to curb inflation in order t have a sustainable economy, according to Governor Mugur Isarescu.
Economic growth coupled with high inflation provokes unneeded distortions, Isarescu explained. The central bank’s preoccupation is to make sure the gross domestic product (GDP) accelerates on low inflation, he added.
"We see no risks over the economic growth, the only problem is inflation," Isarescu said, adding that if inflation is curbed, the central lender will reduce the interest rate.
One factor that could pave the way to "prudently" cutting the key interest rate is good production in agriculture. Last year’s output was plagued by the summer drought which destroyed a third of the early fall crops.
Therefore, Isarescu emphasized the central bank’s decisions will be based on macroeconomic realities, adding the top priority is to cut inflation this year even if the economic growth exceeds 7 percent.
Recently, the finance minister said prognosis indicated a 7 percent economic growth in the first quarter this year and there is no need to change the 6.5 percent target for the whole year.
However, Isarescu pointed again, today, that economic growth should be underpinned by labor productivity and not by new acceleration of demand which is already at a high level.
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