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Romania Monetary Policy July 2023

Romania: NBR leaves policy rate unchanged in July

At its 5 July 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 NBR’s decision followed a slight deceleration in inflation in April–May versus Q1. It was also likely driven by a faster-than-expected slowdown in activity in the quarter and the Bank’s expectation of another weaker than previously forecast result in Q2, coupled with ongoing uncertainty related to the war in Ukraine.

The Bank did not provide any significant forward guidance in its communique. That said, the NBR reiterated its expectation that inflation would continue to fall in the coming months due to lower commodity prices and a strong base effect, in line with its latest medium-term forecasts, which were published in May. As such, any further tightening is currently unlikely, with the majority of our panelists expecting the key rate to end 2023 at its current level.

The next monetary policy meeting is scheduled for 7 August.

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