Romania's February inflation decelerated to 0.24% m/m(10.03.2006)
It seems that the excitement continues on the Romanian market. Inflation
decelerated to 0.24% m/m in February vs. 1.03% the month before, as the
service sector recorded a deflation of 0.29% m/m. The consumer price index
lowered to 8.5% y/y in February from 8.9% y/y the month before. The edible
goods were the main drivers behind the monthly inflation, as their prices
advanced by 0.55% m/m. Non-food prices increased by only 0.16% m/m,
despite the hike of the natural gas price in January which was expected to
put further pressure over prices. It seems that we are on a good path,
after all, although analysts expected a 0.7% rise of the CPI for the
second month of 2006.
The National Bank settled the inflation target to 5% for 2006, +/- 1pps and declared that they are determined to use all possible means for tightening the monetary policy. Therefore, the NBR hiked the monetary policy rate by 100 bps to 8.5% and the positive effects did not hesitate to show out. This unexpected 0.24% inflation was also the result of rising competition among producers who realized they should concentrate more on productivity and lead aggressive price policy to be able to maintain their market share. This should be the ultimate proof that the 8.5% monetary rate is appropriate for the next months and the National Bank should continue in the same prudent manner as lately.
Melania Hancila
Research Analyst Treasury Division
Tel : 40 21 301 73 42
Fax : 40 21 301 09 61
The National Bank settled the inflation target to 5% for 2006, +/- 1pps and declared that they are determined to use all possible means for tightening the monetary policy. Therefore, the NBR hiked the monetary policy rate by 100 bps to 8.5% and the positive effects did not hesitate to show out. This unexpected 0.24% inflation was also the result of rising competition among producers who realized they should concentrate more on productivity and lead aggressive price policy to be able to maintain their market share. This should be the ultimate proof that the 8.5% monetary rate is appropriate for the next months and the National Bank should continue in the same prudent manner as lately.
Melania Hancila
Research Analyst Treasury Division
Tel : 40 21 301 73 42
Fax : 40 21 301 09 61
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