Romanian Inflation Quickens, Supporting Central Bank Hawkishness

(Bloomberg) -- Romanian inflation accelerated to the fastest in five months on higher food and fuel prices, supporting the central bank’s recent hawkish stance.

Consumer prices increased 4 percent from a year earlier in March, up from 3.8 percent in February, data released Wednesday showed. That compares with the 3.9 percent median estimate in a Bloomberg survey of economists. Prices rose 0.5 percent from the previous month.

Romanian Inflation Quickens, Supporting Central Bank Hawkishness

Key Insights

  • The data mean inflation is further outside the central bank’s target band of 1.5 percent to 3.5 percent. The bank has said it will strictly regulate liquidity to keep a lid on price growth, having successfully lobbied the government to amend a banking tax that adversely affected money markets
  • Faster inflation is another headache for an economy already grappling with a slowdown in growth alongside twin deficits. Higher benchmark interest rates would deepen imbalances, according to central bank board member Daniel Daianu

What Economists Say

  • “We expect inflation to be outside the variation band around the inflation target throughout 2019,” said Kevin Daly, a London-based economist at Goldman Sachs

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  • Romania kept its key rate on hold for a seventh meeting last week

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