Romania’s central bank said on Wednesday that it decided to keep its monetary policy rate unchanged at 7% for a fourth consecutive time, according to See News.
The central bank, BNR, also decided to maintain the lending facility and deposit facility rates at 8.00% and 6.00%, respectively, it said in a statement following a board meeting on monetary policy.
The existing ratios of minimum reserve requirements for both Romanian leu and foreign currency-denominated liabilities of credit institutions will also remain unchanged.
The decisions aim to bring the annual inflation rate back in line with the 2.5 percent ±1 percentage point flat target on a lasting basis by anchoring inflation expectations over the medium term, in a manner conducive to achieving sustainable economic growth, the BNR said.
Romania’s annual inflation rate fell to 10.64% in May from 11.23% in April and 14.53% in March, mainly driven by a stronger downward trend in fuel and energy prices, as well as lower crude oil prices and capping schemes for prices of electricity and natural gas.
Based on its current assessment, the BNR sees the annual inflation rate continuing to fall over the following months, in line with the latest medium-term forecast, primarily under the influence of base effects and the downward corrections of some commodity prices in the previous quarter. According to the latest forecast update, inflation is expected to abate to one-digit levels starting with the third quarter of 2023.
The annual growth rate of Romania’s gross domestic product (GDP) decelerated faster than porojected, falling to 2.3% in the first quarter of 2023 from 4.5% in the fourth quarter of last year. The latest data indicates slower economic growth in the second quarter of 2023 than previously anticipated.
The BNR last changed its key rate on January 11, increasing it from 6.75% to 7%. The central bank will hold its next monetary policy meeting on August 7.