ING: BNR may increase interest of monetary policy in 2011

Inflation pressures registered for foodstuff may force BNR to increase the level of monetary policy interest in the first quarter of 2011. Inflation pressures for foodstuff could force the central bank to increase key interest rates from a low 6.25% at present, the senior economist of ING Bank Romania, Nicolaie Chidesciuc explains.

He notes , in a report made by ING that BNR overestimated the impact of VAT increase on the evolution of prices, but underestimated the evolution of prices for foodstuff.“The central bank will probably prefer to maintain the interest rate unchanged at the 2 November meeting, but the rising inflation and inflationist expectations may force BNR to increase the interest rate in the first quarter of 2011, although economic recovery will not show up,” the ING Bank expert explains.

The annual inflation rate went up to 7.77% in September from 7.58% in August, data published by the National Statistics Institute show. In September, consumer prices grew by 0.56%, foodstuff registering the highest increases.

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