Romania’s central bank maintains monetary policy rate at 2.5%

08 February 2019

Romania’s National Bank (BNR) maintained the monetary policy rate at 2.5% in its February 7 board meeting.

The move balances the downward correction of the inflation forecast with the “uncertainties and risks related to the inflation outlook stemming from the new set of fiscal and budgetary measures effective January 1, 2019”.

The status quo was predictable, given the on-going consultations and uncertainty related to the Government’s plans to levy a supplementary tax on financial assets and/or change the definition of the interbank money market with the declared final aim of achieving lower loan interest rates (to the benefit of the people). The Government’s regulations, as already enacted, are weakening the impact of the monetary policy, the central bank warned.

Under such high uncertainty, the central bank still sketched a new scenario for inflation, which reinforces the prospects for the annual inflation rate to decline further during the next three quarters to values even slightly below the previously anticipated ones, before climbing and remaining close to the upper bound of the target band until the end of the forecast horizon.

Romania’s central bank has maintained the monetary policy rate at 2.5% since last May, after having operated two increases of 25 basis points each in February and April to tame inflationary pressures that led the annual inflation up to 5.4% in June.

The downward revision of the economic growth outlook (at home and in Europe) is supporting lower inflation scenarios, and banks have already revised expectations for fewer rate hikes in the future. Therefore, the February 7 decision was no surprise.

editor@romania-insider.com

(photo source: Shutterstock)

Normal

Romania’s central bank maintains monetary policy rate at 2.5%

08 February 2019

Romania’s National Bank (BNR) maintained the monetary policy rate at 2.5% in its February 7 board meeting.

The move balances the downward correction of the inflation forecast with the “uncertainties and risks related to the inflation outlook stemming from the new set of fiscal and budgetary measures effective January 1, 2019”.

The status quo was predictable, given the on-going consultations and uncertainty related to the Government’s plans to levy a supplementary tax on financial assets and/or change the definition of the interbank money market with the declared final aim of achieving lower loan interest rates (to the benefit of the people). The Government’s regulations, as already enacted, are weakening the impact of the monetary policy, the central bank warned.

Under such high uncertainty, the central bank still sketched a new scenario for inflation, which reinforces the prospects for the annual inflation rate to decline further during the next three quarters to values even slightly below the previously anticipated ones, before climbing and remaining close to the upper bound of the target band until the end of the forecast horizon.

Romania’s central bank has maintained the monetary policy rate at 2.5% since last May, after having operated two increases of 25 basis points each in February and April to tame inflationary pressures that led the annual inflation up to 5.4% in June.

The downward revision of the economic growth outlook (at home and in Europe) is supporting lower inflation scenarios, and banks have already revised expectations for fewer rate hikes in the future. Therefore, the February 7 decision was no surprise.

editor@romania-insider.com

(photo source: Shutterstock)

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