Romania Ready to Handle Capital Outflows on Post-Election Risks, Isarescu Says

Romania’s central bank said it’s ready to deal with potential post-election capital outflows should a far-right candidate win the presidential elections in May, pledging to refrain from further interest-rate cuts for now.

Policymakers may consider reducing borrowing costs in the second half of the year if inflation continues to ease, but uncertainties from internal political developments and trade tensions between the US and Europe significantly cloud the outlook, Governor Mugur Isarescu said Monday. A potential trade war would not only boost inflation, but also trigger a recession in Europe, with negative effects for Romania as well, he told reporters in Bucharest.