Romanian Central Banker Says Wages May Spur Inflation

Romanian Central Banker Says Wages May Spur Inflation

Rising wages and economic growth in Romania may spur a ``second round'' of price increases in coming months, central bank Governor Mugur Isarescu said at a conference in Bucharest, Bloomberg reported.

Inflation, which accelerated to the fastest in two years in February on international food and fuel prices, may suffer further pressure from wage growth, Isarescu also said.

``The danger is that a second round of price increases, a so- called inflation spiral, will appear because of higher wages,'' Isarescu said. ``Economic growth is OK, but you have to not push it. I have to accept that politicians address economic growth because this seems like a simple success.''

The Banca Nationala a Romaniei increased its main interest rate last month by a half point to 9.5 percent, its fourth consecutive increase, after annual inflation rose to 8 percent in February. Net monthly wages rose an annual 31 percent in January.

Romania must cut the inflation rate to 3 percent by the end of 2010 or risk missing its target of adopting the euro in 2014, Isarescu said.

He also said the leu's current exchange rate is ``more sustainable'' than before. The leu has dropped 9 percent against the euro in the past year and was trading at 3.6566 to the euro as of 9:30 a.m. in Bucharest.

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