Thursday, 26 June 2008

Romania interest rates hit 10%

Romania's central bank raised interest rates by a quarter point to 10 percent, tightening tightening monetary conditions for the sixth time in a row.

Romania has faced exceptionally difficult and contradictory pressures on the functioning of its monetary policy regime owing to peculiar features and objectives of the Romanian economy. The problem stems from the requirements imposed by the convergence process required to join the European Union, and, eventually, the European Monetary Union. This requires sustainable high economic growth and the consolidation of disinflation simultaneously.

We believe the operational requirements of the implementation of a strict inflation targeting regime are unlikely to be met under the current monetary transmission mechanisms.

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