No consensus among analysts over Romanian central bank’s next step

The National Bank of Romania (BNR) could increase its monetary policy rate to 3.5% in the second half of this year, Ciprian Dascalu, chief economist at Banca Comerciala Romana (BCR), said while attending an event on Tuesday, February 22.

But the tight liquidity control will make the Lombard rate 1pp above the refinancing rate, the real benchmark for the cost of money, he added, according to local Agerpres.

The BCR chief economist expressed expectations regarding the classic approach that a central bank is supposed to pursue in fighting inflation.

BRD chief economist Florian Libocor, however, argued in favour of smoother adjustments of the monetary stance, and he seems to blame BNR (and other central bankers in the region) for mimicking the European Central Bank’s moves.

Libocor said that demonstrating more prudence in changing the monetary policy stance would be advisable, and he implied central bankers in the region rushed to follow the European Central Bank (ECB).

In December, with all data at hand, you decide it’s not the time to rush with the rate hikes and the next day, you say you have a problem, really, that speaks for professionalism - Libocor stated more or less.

Indeed, in a key statement last week, Philip Lane, chief economist of the European Central Bank, has shifted his position on eurozone inflation by saying it looks unlikely to drop below its 2% target in the next two years. Only three weeks ago, Lane said that inflation was equally likely to drop below the ECB’s target and stabilise at that level in the medium term.

Since then, record eurozone inflation of 5.1% prompted ECB president Christine Lagarde to say inflation risks were “tilted to the upside” while refusing to rule out raising rates this year.

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