RO central bank shares "very serious" concerns about inflation

Speaking of the evolution of inflation against the background of the crisis in Ukraine, National Bank of Romania (BNR) spokesman Dan Suciu speaking for Profit.ro said that "there are really very serious concerns" prompted by the expected impact on the energy prices.

"We are trying to figure out the future developments because the volatility is high, and there is not much visibility," he stated, quoted by News.ro.

Suciu mentioned the natural gas price issue that is going to gradually diminish given the lower consumption after the end of the cold season and because of the continuation of the 'cap and subsidy' scheme.

But he warned that "we have to watch closely the price of fuel, which has a direct and fast impact [on consumer prices]."

The oil price is already above USD 100 a barrel and has an important weight in the inflation index, BNR spokesman said.

Regarding the national currency, Dan Suciu said that he expects "certain stability of the exchange rate," implying that BNR will step in to "provide stability" - an attitude broadly expected among banks given the high elasticity of the consumer prices to the exchange rate.

"BNR is providing a bit of stability in the context of high volatility. We don't rule out episodes of [exchange rate] volatility, they will probably occur if the crisis continues, but we are confident that we can provide exchange rate stability," BNR's Suciu stressed.

As regards potential contagion via financial system channel, Suciu expressed much more moderate concerns, if any.

"The exposure of Romanian banks to the former Soviet Union, especially Russia and Ukraine, is minimal," and" the banking relations [to that area] were little developed".

(Photo: Shutterstock)