Romania’s National Bank (BNR) decided on Wednesday, April 4, to keep the monetary policy rate unchanged, at 2.25% per year.

The BNR board’s decision came as a surprise as local analyst were expecting another rate increase after the two already made in January and February. BNR increased the monetary policy rate from 1.75% to 2.25%, in two stages, to curb inflation.

The rising inflation and the recent monetary policy rate increases have tensed the relation between the ruling Social Democratic Party (PSD) and the central bank. The ruling coalition leader Liviu Dragnea wrote to BNR governor Mugur Isarescu and demanded answers to the recent evolutions. Then, last week, when Isarescu was called to answer before a parliamentary committee, the PSD MPs didn’t attend the meeting. Some interpreted this as a warning that the ruling party gave Isarescu.

However, the central bank governor suggested the decision to maintain rates unchanged was not determined by political pressure.

“Our decisions are based on data, figures and facts in the economy and financial sector. In the end, what is the essence of today’s decision? We think that a good treatment does not only represent the medicine but also the dosage and the pace at which the treatment is administered,” Isarescu said, local Ziarul Financiar reported.

He explained that, in BNR’s view, the annual inflation rate will stop at around 5% and then start to decrease again.

“We will see if this forecast fulfills and then take further action,” he added.

editor@romania-insider.com