Romania's Central Bank Governor Mugur Isarescu: negative economic growth estimates for 2009 drop below 5.5% / Salary increases cause the biggest problems

Romania’s Central Bank Governor Mugur Isarescu presented on Monday the quarterly report on the inflation rate. Thus, the governor declared that there was a favorable inflation rate in the third quarter of the year. He added that overall, the agricultural sector managed to decrease the inflation tension.

Isarescu declared that there is no clear solution yet regarding the best policies implemented by the new government to cut spending. For the next year, the central bank estimated an annual inflation from 1% to 5%. The factors that will influence inflation will be: the policies adopted by the future government, flexible food process and the exchange rate.

UPDATE: Mugur Isarescu: the Central Bank increased, then decreased the monetary base/ I had no proposals to become PM/ Romania does not need IMF aid/ Slightly negative amendment for the 2008 inflation: 6.7% instead of 6.6% and for 2009: 4.5% instead of 4.2%

Isarescu emphasized that the exchange rates were still volatile, and announced that there are some pressures over those with credits in euro. Isarescu announced that the inflation estimates for 2008 were negatively modified, to 6.7% instead of 6.6% and for 2009 from 4.2% to 4.5%.

Isarescu declared that the central bank intervened to counter the anomalies on the market since some banks failed to take precautionary measures. Isarescu declared that, through their actions, they threatened the entire economy because they offered credits too easy.

Isarescu added that there was no lack of liquidity on the market because 20% of the bank’s funds were at the central bank. Romania’s central bank governor said that the bank has an increase of the foreign currency by almost 1,300 million euro compared to September.

Isarescu declared that he hoped to maintain the inflation under control and under 10% with the new government. He said that Romania did not need IMF aid as it has enough reserves. He added that the central bank has the same position as those in Hungary and Poland when it comes to speculating banks.