Romania Monetary Policy


Central Bank stays put in May

At its 2 May meeting, the National Bank of Romania (NBR) left the monetary policy rate unchanged at a record-low of 5.25% for the ninth consecutive meeting. The move was widely anticipated by market analysts, as policy makers seek to anchor inflation expectations firmly amid a transitory inflation bout and volatile capital markets. The Bank also left its minimum reserve requirements on both leu and foreign-exchange deposits unchanged.

Regarding inflation developments, the Bank noted that "latest developments in macro-economic indicators reveal ongoing disinflation, in line with the previous projections, on the back of the fading out of the transitory impact of supply-side factors, the improvement of inflation expectations, and of the persistence of the negative output gap". In order to moderate interest rate volatility, the NBR Board decided to narrow the interest rate corridor around the monetary policy rate from +/- 4 percentage points to +/- 3 percentage points. According to the Bank, this move is aimed at strengthening the transmission of the policy rate signal and benefitting the credit market in domestic currency by reducing the cost of new loans. The next monetary policy meeting is scheduled for 1 July.

Consensus Forecast panellists expect the Central Bank to leave the policy interest rate broadly unchanged this year, resulting in a year-end rate of 5.20%. For 2014 the panel foresees the rate closing the year at 5.21%.


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Romania Monetary Policy Chart

Romania Monetary Policy April 2013

Note: National Bank of Romania reference rate in %.
Source: National Bank of Romania (NBR).

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