Romania’s FinMin says further monetary rate cuts could help economy

There is still room for further reduction in Romania's monetary policy interest rate given the lower-than-expected inflation rate, finance minister Florin Citu said in a press conference on November 14.

A couple of days earlier, Romania's National Bank (BNR) revised its inflation forecast, slashing the projected year-end inflation rate by 0.6 pp to 2.1%, but decided to maintain the policy rate at 1.5%. In its monetary rate decision and quarterly inflation report, BNR cited the fiscal policy (besides the income policy) as a source of uncertainty.

One day later, the National Statistics Institute (INS) issued Q3 GDP flash estimates that disappointed some due to the incomplete economic recovery they revealed.

In his statement on November 14, minister Citu argued that further rate cuts would stimulate the economy, Hotnews.ro reported. He argued that it is only natural to see a rate cut following the drop in inflation.

He stressed that the central bank's independence forbids him from discussing interest rate policy with the BNR officials, but argued that there are reasons for a rate cut: the monetary policy in Romania is higher than in other peer countries, and the inflation dropped more than the central bank expected.

The finance minister expressed his confidence in a robust 4% economic growth next year.

(Photo source: Inquam Photos/Octav Ganea)