Romanian FinMin speaks of curbing consumption by hawkish monetary policy

Romanian finance minister Marcel Bolos announced a yearend inflation target of 4.4%, compared to the 4.7% estimate of the National Bank of Romania (BNR), and said that “we, through the monetary policy we have, will basically maintain the interest rate policy [that we have in place] at the moment.”

“Perhaps tempering consumption is a solution to stabilize and continue the deflationary process,” Bolos said, according to Economica.net.

The minister of finance also stated that the government attempts to stabilize the public payroll and social spending, but added that other components of the public budget are directed to consumption [as opposed to investments] as well.

Analysts expect BNR to cut the monetary policy rate, currently at 7%, for the first time in May and bring the policy rate down to 5.75%-6% by the end of the year.

The monetary authority, however, at its April 4 board, maintained a rather high uncertainty about the calendar of further rate cuts, invoking a multitude of risks associated with the inflation outlook.

The annual inflation rate will decline over the following months [starting with March] on a slightly higher path than that shown in the February 2024 medium-term forecast, the BNR said in its press release, outlining a long series of uncertainties and risks associated with the inflation outlook.

(Photo source: Gov.ro)