Romania’s central bank will likely keep its key interest rate on hold for a fifth straight meeting as policymakers weigh potential easing against stubborn inflation and fiscal risks, according to Bloomberg.
The bank’s board will keep the benchmark rate unchanged at 7% on Monday, according to all economists polled in a Bloomberg survey. They’ll also approve an updated inflation forecast that’s expected to confirm a slowdown in price growth to about 7% at the end of this year from 10.25% in June.
While the other central banks in the region have begun discussing or moving toward monetary policy easing, the National Bank of Romania is trying to strike a balance between an economic slowdown and the risks posed by potential tax increases.
The government in Bucharest is struggling to address a worsening budget deficit that risks triggering a loss of much-needed European funds. Prime Minister Marcel Ciolacu said last week that a deficit target was at risk as the coalition struggles to agree on spending cuts and revenue increases.
“The central bank will stay on course on Monday and for the rest of the year, despite the more frequent dovish statements coming from other central banks in the region,” said Valentin Tataru, a Bucharest-based economist at ING Groep NV.