Romania's central bank maintains refinancing rate at 2.5%

Romanian central bank BNR in its July 4 monetary board meeting maintained, in line with expectations, the refinancing rate at 2.5%, as well as keeping the interest paid for overnight deposit facility at 1.5% and the overnight lombard facility cost at 3.5%.

CORE2 inflation, which reflects the dynamics of the prices eliminating as many seasonal or volatile influences, accelerated to 3.2% in May from 3.0% in April, the central bank stated mentioning at the same time further upward inflationary pressures.

Apart from the impact of the new tax levied on telecom companies and of the hike in some international agri-food prices, the advance (of the CORE inflation) mirrors strong demand-pull and wage cost-push inflationary pressures, alongside the upward adjustment in short-term inflation expectations. High uncertainties continue to be associated with the future fiscal and income policy stance, while the evolution of the current account deficit remains a matter of concern, the central bank commented in its release speaking of internal developments.

Also important are the uncertainties about the pace of euro area and global economic growth – inter alia amid the trade war and Brexit –, as well as about the international oil price developments. Particularly relevant were considered the prospective easing of the monetary policy stance by the ECB and the Fed, and the conduct of central banks in the region.

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