The inflation rate was maintained in the interval aimed by the National Central Bank and the factors that contributed to this were: the persistence of the demand deficit, the decrease of labor costs and the favorable influence of foreign prices, Central Bank Governor Mugur Isarescu declared in a presentation of the inflation report. There is a demand deficit, namely the economy will function below its potential in the upcoming period. Debt to the private economic agents can be considered a bad tax over the economic environment, Isarescu said.
Here are his main declarations:
the impact of VAT increase over prices is permanent, but its impact on inflation is temporary
the increase of VAT would generate an increase of consumtion prices by 4.2%
for 9% of the products included in the consumption, the VAT remains the same
the possible effects will be somewhere between 2.9%
the Finance minister needs to take up every loan opportunity. The ministry needs a strategy for the loans from the foreign market, announce it publicly and discuss it with foreign investors
currently, Romania's public debt and foreign debt are high and the strategy is essential
the Central Bank is ready to supply the market with liquidity, but not too much so it will pressure the banks because banks would be in a position to cover the excess through deposits
The inflation rate was maintained in the interval aimed by the National Central Bank and the factors that contributed to this were: the persistence of the demand deficit, the decrease of labor costs and the favorable influence of foreign prices, Central Bank Governor Mugur Isarescu declared in a presentation of the inflation report. There is a demand deficit, namely the economy will function below its potential in the upcoming period.
