BUCHAREST (Romania), August 2 (SeeNews) – The International Monteray Fund said Romania’s central bank may have to raise the interest rate this year to offset a possible hike of energy prices, Bloomberg reported.
The central bank should keep a bias toward tightening monetary policy even as inflation is expected to slow after the effect of last year’s tax increase wanes, Bloomberg quoted the head of the IMF mission to Romania, Jeffrey Franks, as saying.
A central bank decision to cut the minimum amount of foreign currency that banks should keep "would be unwise at the moment," Franks also said.
In June the central bank left its benchmark interest rate unchanged at 6.25% for more than a year to curb inflation fuelled by a 5 percentage-point increase in the value- added tax and rising global commodity prices. The central bank expects inflation to slow to less than 5.0% in September as a good harvest drives food prices lower, Bloomberg (www.bloomberg.com) said.
"The early indications that we get from inflation for July seem to be quite good, so pressure has eased a bit," Franks said. "We would still advise the central bank to keep a tightening bias, to be prepared to go up rather than down, but the key is to see what happens in July and August."
He added that some increases in administered prices are possible later this year.
The central bank will hold its next monetary policy meeting on August 3.