at 9.8% at the end of this year, driven by larger-than-expected non-food and service price rises. "The question is whether we should further restrict demand. I think we should know our place, do more good than harm to avoid causing recession that will unbalance other areas," Isarescu said, adding he favoured fine-tuning measures.
He also warned that Romania's current account deficit, which soared to nearly 10% of gross domestic product last year, needed to be corrected gradually, possibly through a weaker currency. He also said a firmer leu currency would not help lower inflation sustainably. The leu was flat against the euro on Wednesday. Earlier this month, policymakers kept the benchmark interest rate unchanged following a 16-month hiking cycle, joining their central and eastern European peers which had already paused as their economies tipped into technical recessions. Isarescu said it was not certain the bank's key rate had peaked at 7.00%, although the next rate move would depend on developments.
"When I am asked if we plan to hike further, I answer, it depends on what happens. We have never said that's it, the maximal rate is 7.00%." He also said a rate cut would not happen before annual inflation falls down to the key rate level. (Reporting by Luiza Ilie; editing by Kim Coghill and Sharon Singleton)
