He said the central bank needs to remain vigilant. “A monetary policy tightening is possible in the near future but it’s up to the central bank,” Franks added.
According to IMF forecasts, Romania’s annual inflation will stay above 8% in the coming months, but the rate will further drop significantly as the effects of the sales tax increase in July 2010 will dissipate.
On Tuesday, the Romanian statistics institute said the annual inflation rate rose to 8.34% in April, the highest since July 2008, after a 0.66% monthly increase in consumer prices.
Last week, the central bank kept its key monetary policy rate unchanged at 6.25% for the eighth consecutive meeting. It also revised upwards its forecast for 2011 inflation to 5.1%, from 3.6% previously.