Romania Ctrl Bk Needs Lower Oil Prices To Meet Inflation Target

"I cannot say the central bank is optimistic… but we have to keep the inflation under control," Isarescu told a Gulf Cooperation Council investment forum in Bucharest.

He said inflationary pressures come mostly from food prices, as Romania does not make use of its great farming potential, and oil prices, whose trend he hopes will reverse.

"Of course a continued growth in oil prices will introduce additional inflationary pressures," Isarescu said. However, he added he counts on an increased Saudi supply to compensate Libya's lower output and lead to a price fall.

"Thus, oil prices might revert to below $100 per barrel, maybe towards $80," the governor said.

Isarescu also pointed out that the Romanian leu gained some 7% against the US dollar since the beginning of 2011, so that the exchange rate influence cannot be cited as reason of fuel price increases.

Since the start of this year, oil companies in Romania rose the fuel prices by some 3.5%. Generally, the fuel providers cite international oil prices and internal competition as grounds to increase product prices.

Romania's central bank estimates the inflation rate will fall towards 3.6% by the end of the year from 7% in January. The central bank set a target range of 2% to 4% for the December inflation rate.

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