Romania‘s central bank (BNR) announced on Wednesday that it will increase its monetary policy rate to 2.50% from 2.00% as of February 10, its fourth rate hike since May 2018, according to See News.
“The central bank also decided to raise the deposit facility rate at 1.50% per year from 1.00% and increase the lending facility rate to 3.50% from 3.00%,” BNR said it said in a statement after a board meeting on monetary policy.
BNR plans to maintain the existing ratios of minimum reserve requirements for both leu- and foreign currency-denominated liabilities of banks.
The central bank explained that the current scenario, which is based on the available data and the regulations in force, shows a considerable worsening of the short-term outlook for inflation, under the strong impact of supply-side shocks, mainly of energy prices, as the forecasted path of the annual CPI rate has been again revised markedly upwards over the short-term horizon.
The annual inflation rate is expected to significantly accelerate its growth in the second quarter of 2022 and thus rise to a double-digit value, mainly as a result of far higher increases in natural gas and electricity prices, which will be strongly manifest after the withdrawal in April of compensation schemes for household consumers.
A major source of uncertainties and risks remains the absorption of EU funds, especially those under the Next Generation EU programme.
The next monetary policy meeting of the central bank’s board is scheduled to take place on April 5.