NBR can no longer reduce inflation on its own

The NBR (National Bank of Romania) will keep the interest rate high for a long period of time in order dampen inflation, but it will not meet its target without support from the Government, which must keep the wage rise in check, analysts feel. The central bank raised the monetary policy interest rate at the end of last week for the sixth time in a row, taking it to 10% a year. Since last October, the RON key interest rate has climbed by 3%, after the NBR acted in response to an inflation surge. “The NBR’s move is in line with anticipations. The central bank is sending one message: that inflation must go down. But the reduction in inflation is not in our hands, it depends on the Government’s ability to maintain a budgetary balance, and on the Executive’s strength to keep from increasing the minimum wage,” said Eugen Radulescu, advisor to the NBR Governor.