Romania Inflation Jumps Even as Central Bank Sees Slowing Ahead
(Bloomberg) -- Romanian inflation jumped in July on an increase in excise duties on fuel even as the central bank pressed forward with monetary easing as prices increases are set to resume a downward path.
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Consumer prices rose 5.4% in July from a year earlier compared with 4.9% in June, the statistics office said on Monday. That’s higher than the 5.1% median estimate of economists in a Bloomberg survey. Prices rose 0.6% from the previous month.
Romania’s central bank unexpectedly cut borrowing costs for a second consecutive meeting this month and lowered its inflation forecast for this year to 4% as policymakers bet that price growth will return to a price target band at the end of next year.
Still, Governor Mugur Isarescu of the National Bank of Romania said Friday that future easing will depend on data as rate-setters weigh the effects of an “expansionist” fiscal policy on wage increases and price pressures.
The inflation rate will resume its decline after the current increase, according to Vlad Ionita, a Bucharest-based economist at Erste Group Bank AG, who expects two more rate cuts this year to 6%.
“We do not exclude, however, the possibility of one less cut this year if inflation surprises to the upside,” he said. “Political noise, as we are heading into year-end general and presidential elections might also determine the central bank to be more cautious.”
--With assistance from Barbara Sladkowska.
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