Romania maintains monetary policy rate

Romania's National Bank (BNR), in its April 2 monetary board meeting, maintained the monetary policy status quo, with the policy rate remaining at 2.5% for nearly one year. The decision confirmed the market’s expectations.

The Quarterly Inflation Report expected in May will predictably bring more clarity in the central bank’s policy after the Government amending the “greed tax” mostly removed the concerns related to the weakening of the central bank’s instruments.

In its April 2 monetary policy release, BNR mentioned the rising inflation but also the Current Account developments (i.e. CA gap widening) among the main internal matters of concern, a note that points to the complex monetary policy dilemma that apparently cannot be dealt with only in terms of monetary policy rate (hiking it versus cutting it).

“The uncertainties and risks surrounding the inflation outlook stem from the fiscal and income policy stance and labor market conditions. The evolution of the current account deficit remains a matter of concern,” BNR’s release reads.

It also notes the uncertainties related to the pace of euro area and global economic growth, the international oil price developments, the monetary policy stances of the ECB and central banks in the region, and to the effect of Brexit.