Inflation rose in February 2022 in Romania as well, reaching 8.5%, but it is a general global phenomenon and the growth is relatively small compared to the previous month and significantly lower than in other countries in the region, says Dan Suciu, spokesman of the National Bank of Romania.
According to him, Romania is in the middle of the inflation ranking of EU countries.
“Recently, a number of questions have risen regarding the evolution of inflation, the exchange rate and the capacity of the Romanian state to manage the financial situation as a result of the tension generated by the Russian aggression on Ukraine. Below, some clarifications related to the latest developments… Inflation rose in Romania in February 2022, reaching 8.5%, but it is a general global phenomenon, the growth is relatively small compared to the previous month and significantly lower than in other countries in the region. The Baltic countries, although in the euro area, have inflation between 11% and 14%, Poland and Bulgaria, the Czech Republic already have over 9%. We are, together with Hungary, Belgium, etc., in the middle of the EU ranking. All this in the conditions in which, last year, Romania was the country with the highest inflation in the EU,” Dan Suciu says.
Regarding the evolution of interest rates in relation to inflation, he states that there is a direct correlation between rising inflation and interest rates and that is why interest rates have risen all over the world.
“In Romania, interest rates continue to be well below the inflation rate. ROBOR at 3 months, most often taken as a benchmark, is of 4.36%, and at 12 months, of 4.52%, so almost half of the inflation rate. As inflation and interest rate hikes are taking place all over the world, the only comparison that can be made is how real negative the interest rate is in different countries. At 2-4% negative real interest rate we are still in the middle of the ranking among EU countries, so it cannot be said that there has been an exaggerated increase in interest rates,” Dan Suciu says.
He also mentions that although the state’s loan interest rates have increased recently, this has happened not only in Romania, but also in the region, even to a greater extent, and does not represent a decrease in confidence for the Romanian state.
“For example, the gap in interest rates on 10-year Romanian government bonds with similar Hungarian and Polish bonds has narrowed by about 0.5 percentage points compared to the end of October 2021. In the last two months, the Romanian state has repaid two substantial loans, engaged in the past: on February 7, a $2.1 billion US dollar-denominated bond was repaid, with a 10-year maturity and on March 8, 2022, the reimbursement of an issue of government securities denominated in lei took place, with an initial maturity of 5 years, amounting to 10.5 billion lei. If there was no confidence in the financial situation of the Romanian state, such reimbursements would have been made with great difficulty. It was not the case. Repayments went smoothly, although during this period the war in Ukraine began, which brought a lot of tension and volatility in the international financial markets,” Suciu added.