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Romania Monetary Policy April 2023

Romania: NBR keeps the policy rate unchanged in April

At its 4 April meeting, the National Bank of Romania (NBR) left the policy rate unchanged at 7.00%. Additionally, the Bank left the deposit facility and the lending facility (Lombard) rates unchanged at 6.00% and 8.00%, respectively. The minimum reserve requirement was also left unchanged.

The Bank’s decision followed the slight deceleration of inflation in January–February versus Q4 2022. Moreover, despite stronger-than-expected activity in Q4, the Bank likely decided to hold fire based on uncertainty regarding further fallout of the war in Ukraine, higher risk aversion in global markets and the government’s fiscal policy stance.

While there was no explicit forward guidance, the Bank reiterated that it anticipates inflation to decelerate more quickly in the coming months on the back of sizeable base effects, lower prices for some commodities, energy price caps and compensation schemes. Most of our panelists expect the NBR to leave the policy rate unchanged at 7.00% throughout 2023.

On the outlook, Ciprian Dascalu, analyst at Erste Group, commented:

“We see [the] key rate unchanged throughout 2023. Liquidity management, the NBR’s favorite policy tool, is likely to be actively used over the coming quarters, depending on the EUR/RON and upcoming inflation readings. Hence, RON money market interest rates should trade within the NBR standing facilities corridor of 6.00–8.00% throughout 2023.”

The next monetary policy meeting is scheduled for 10 May 2023.

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