BNR forecasts 4% inflation rate after Romania’s accession to EU

The National Bank of Romania (BNR) maintains the 5 percent inflation target for this year but predicts that in 2008 the inflation rate will drop to 4 percent, following Romania’s accession to EU. The inflation dropped from 9.3 to 8.6 percent in 2005 but it was still higher than the predicted 7.5 percent.

Unlike some East European states that employed a monetary council to lower inflation, Romania adopted a gradual drop policy that allowed more flexibility in implementation, the BNR governor Mugur Isarescu said on Wednesday within a conference on inflation.

BNR is to announce the 2008 inflation target in the fall. Isarescu considers that this target depends on government’s policies, hence it is to be announced only in the wake of negotiation with BNR. The inflation rate is expected to drop below 4 percent in 2008-2010, according to Isarescu.