Romania’s reserve bank left its key rate of interest the same on Wednesday, as it anticipates inflation to fall within its target in the coming months.
The board of the National Bank of Romania left its monetary policy rate unchanged at 2.50 percent, in line with financial experts’ expectations.
The bank kept its deposit facility rate at 1.50 percent and the loaning center rate at 3.50 percent.
The reserve bank likewise chose to keep the existing levels of minimum reserve requirement ratios on both leu- and foreign currency-denominated liabilities of credit institutions.
“The current assessments reconfirm the outlook for the annual inflation rate to decrease more towards the upper bound of the variation band of the target at the end of this year, in line with the August 2018 medium-term projection,” the bank stated in a declaration. Headline inflation rose to 5.1 percent in August, which was well above the bank’s 1.5-3.5 percent target range. Salaries continue to increase at double-digit rate and the GDP development is above potential. The bank account deficit widened to a five-year high. Capital Economics financial expert Liam Carson expressed concern that the monetary policy would not be tightened strongly enough. “This might result in a build-up of economic imbalances and cause inflation expectations to become unanchored,” the economic expert said. “We think that further rate of interest walkings are required to cool the economy,” Carson added.
Capital Economics expects the NBR to raise the policy rate to 4.25 percent by the end of next year, which suggests more walkings than what markets presently anticipate.
The material has actually been supplied by InstaForex Company – www.instaforex.com