Romania: Central Bank keeps monetary policy rate unchanged at February meeting
February 7, 2017
At its policy meeting on 7 February, the National Bank of Romania (NBR) met market expectations in deciding to keep the monetary policy rate unchanged at 1.75%, where it has been since May 2015. The Bank also left the reserve requirement on foreign currency-denominated liabilities unchanged at 10.00% and the minimum reserve requirement ratio on credit institutions’ leu-denominated liabilities at 8.00%.
In its accompanying statement, the NBR noted that the economy had decelerated in Q3 from Q2’s impressive growth rate due to a slowdown in domestic demand. The annual variation of consumer prices in the country continued to linger in negative territory in December. Inflation is expected to resurface in the first quarter of this year as the transitory effects of VAT tax cuts and excess demand start to fade.
Against a backdrop of heightened uncertainty in Romania and abroad as well as low inflation expectations, the NBR decided to keep the rate unchanged in order to “ensure and preserve price stability over the medium term in a manner conducive to achieving sustainable economic growth.”
The Bank is scheduled to meet again on 5 April.
Author: Christopher Mc Innes, Economist