The National Bank of Romania (BNR), Romania’s central bank, decided on Wednesday to maintain the monetary interest rate to its current level of 2.5 percent for the third time in a row, confirming economists’ expectations.
On May 7, the central bank raised the monetary interest rate from 2.25 percent to 2.5 percent, the highest level since February 2015, as a consequence of upward revision of the inflation forecast.
“In its meeting of 3 October 2018, the Board of the National Bank of Romania decided: to keep the monetary policy rate at 2.50 percent per annum; to leave unchanged the deposit facility rate at 1.50 percent per annum and the lending facility rate at 3.50 percent per annum; to maintain the existing levels of minimum reserve requirement ratios on both leu- and foreign currency-denominated liabilities of credit institutions,” the central bank said in a press release.
Central bank’s decision was expected by the economists.
“Eventual comments by Governor Mugur Isarescu regarding the regularity of open market operations will undoubtedly be watched by the market, though we doubt any commitment as the central bank will likely prefer to keep more flexibility on liquidity management to fend off currency depreciation pressures,” ING Bank analysts said in a research note.
Romania’s annual inflation rate soared to 5.4 percent in May and June, the highest rate since June 2013, but slowed to 5.1 percent in August.
The current BNR forecasts show inflation hitting 3.5 percent at the end of this year and 2.7 percent in December 2019.