Romania’s central bank keeps interest rates unchanged as inflation slows down

Romania’s National Bank (BNR) decided on May 10 to keep the monetary policy rate unchanged at 7% after the annual inflation rate slowed down to 14.53% in March from 15.52% in February.

“In the first three months of 2023 overall, the annual inflation rate declined considerably (from 16.37% in December 2022), posting the first contraction in nine quarters, in line with expectations. The decrease was mainly driven by the sizeable drop in the dynamics of fuel and electricity prices, under the impact of significant base effects and the change made to the energy price capping and compensation scheme starting January 1, 2023,” BNR said in a press release.

“The annual inflation rate will probably remain on a downward path almost similar to that envisaged earlier, dropping to a one-digit level in 2023 Q3 and staying near the variation band of the target at the end of the projection horizon,” the central bank added.

The decrease will be further driven by supply-side factors, especially by disinflationary base effects and downward corrections of some commodity prices.

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