Tuesday, June 2, 2009

Romania’s Key Rate to Fall as Inflation Slows, Financiar Says

By Adam Brown

June 1 (Bloomberg) -- Romania’s main interest rate should fall gradually this year as inflation slows, central bank Governor Mugur Isarescu said in an interview with Ziarul Financiar.

An interest rate more than three percentage points above the inflation rate is unsustainable for Romania, Isarescu told the daily financial newspaper.

The country’s annual inflation rate slowed to 6.5 percent in April and the central bank targets a year-end rate of between 2.5 and 4.5 percent. The interest rate stands at 9.5 percent, tied with Hungary for the highest in the European Union.

Isarescu also told Ziarul Financiar that a summer drought could drive up food prices, accelerating inflation in the second half.

To contact the reporter on this story: Adam Brown in Bucharest atabrown23@bloomberg.net

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