Romania’s central bank said that it decided to keep its monetary policy rate unchanged at 7% – for the fifth time since January, 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 on Monday.
The existing ratios of minimum reserve requirements for both Romanian leu and foreign currency-denominated liabilities of banks 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 10.25% in June from 10.64% in May and 11.23% in April, on the back of a faster annual decline in fuel prices and slower growth of processed food prices.
Based on its current assessment, the BNR sees the annual inflation rate continuing to decline 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) decreased faster than projected, falling to 2.4% 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 and third quarters of 2023 than previously anticipated.
The BNR last changed its policy rate on January 11, increasing it from 6.75% to 7%. The central bank will hold its next monetary policy meeting on October 5.