Romania’s parliament gave backing to the new makeup of the central bank board, extending the mandate of Governor Mugur Isarescu and raising concerns that political influence may play a bigger role in monetary policy.
Lawmakers in Bucharest voted today to approve the nine-member board, with Budget Minister Liviu Voinea becoming deputy governor. Florin Georgescu will stay as first deputy governor and Bodgan Olteanu remains as a deputy. Deputy Governor Cristian Popa’s mandate wasn’t extended. The new board will take office in October.
“It’s negative that the new board won’t include Popa because his experience will be hard to match but also because many of the newly entered members are close to the political scene,” Vlad Muscalu, an analyst at ING Bank Romania SA, said in an e-mailed report.
With the economy growing at the fastest pace in the European Union in the first quarter and inflation at a record low, Romanian policy makers halted an easing cycle in March after 175 basis points of interest-rate cuts during the preceding nine months. The Banca Nationala a Romaniei held the benchmark at 3.5 percent and kept reserve requirements at their current levels for liabilities denominated in leu and foreign currency on May 6.
The leu fell 0.1 percent to 4.3965 per euros at 3:54 p.m. in Bucharest today.
The new board also includes Deputy Finance Minister Gheorghe Gherghina, Daniel Daianu, a former deputy president of the country’s financial market regulator, and existing members Agnes Nagy, Virgil Stoenescu and Dinu Marin.
“Ties between central banks and governments have become tighter in other countries too in past years and the market may prove tolerant to such adjustment,” Muscalu said.