Romania might fail to enter the Eurozone in 2014 because of the wide inflation, official says

The official noted Romania’s inflation by 2010 should comply with the criteria established by the Maastricht treaty. This says the inflation of the countries entering the Eurozone should not exceed by 1.5 percentage points the average inflation of the top 3 economies in EU.

BNR will continue to take all the needed measures for the country to be a part of the Eurozone in 2014, BNR’s chief economist Valentin Lazea said in late January.

The government and BNR set up two years ago a calendar for Romania’s entrance into the Eurozone. The target was decided for 2014, as the two institutions considered they will have enough time to take all the fiscal and monetary measures in order to reach the mentioned deadline.

Lazea noted 2007 was not a good year regarding the efforts made towards reaching the 2014 target. The BNR official warned Romania might miss this year too if the appropriate financial measures will not be taken.

Lazea explained BNR lately used a series of levers in order to control the inflation and the exchange rate. The central bank increased the monetary policy rate and sterilized the excessive liquidity in the market, according to Lazea.

The official said BNR did not start to sell from its foreign currency reserves, in order to temper the exchange rate, yet such a move is expected. BNR could also increase interests for the leu, in order to make it more attractive, the official noted.

BNR is currently trying to control inflation, as it missed last year the 4 percent target. Romania registered a 6.57 percent inflation rate, at the end of 2007.

The central bank is also paying attention to the current account deficit, which widened 52 percent in the first 11 months of 2007

Source: NewsIn