Romania's National Bank (BNR) maintained the refinancing rate (1.25%) and its entire set of policy instruments unchanged in the May 12 monetary board meeting - confirming the consensus expectations.

Amid a global inflationary sentiment, the Romanian central bank points to the drop in the core inflation in Romania (despite higher headline inflation fueled by electricity price liberalization) and to the sluggish economic growth in the first quarter of 2021 after robust recovery seen in the second half of 2020.

In line with expectations, the annual adjusted CORE2 inflation rate continued to decrease in 2021 Q1, falling to 2.8 percent in March 2021 from 3.3 percent in December 2020.

Separately, based on the latest high-frequency indicators, BNR concludes that the economic recovery continued in the first quarter of 2021 but at a much slower pace amid mixed developments in the structure of aggregate demand and at sectoral level.

The inflation outlook, to be published on May 14 along with the quarterly Inflation Report, was revised upward while the central bank points to "considerable uncertainties."

Considerable uncertainties and risks to the new outlook stem from the evolution of the pandemic, the fiscal policy stance (in the context of the budget consolidation presumed to be carried out gradually over the medium term, and the absorption of European funds), and the synchronised uptrends in many commodity prices - the central bank says.

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iulian@romania-insider.com