Forecasts from Romania’s Central Bank
Romanias Central Bank is keeping the monetary policy interest rate at 2.5% a year and confirms the inflation rates downward trend.
Ştefan Stoica, 07.11.2018, 14:39
The Romanian Central Bank (BNR) decided to maintain the monetary policy interest rate at 2.5% per year. According to BNR experts, the measure was based not only on the latest inflation developments, but also on the 4.1% economic growth in the second quarter of the year, the decreasing annual household consumption, a rise in productivity as well as significantly increased exports. Other reasons that influenced the BNR decision, were the negative contribution of investment to economic growth as well as the slowdown in the positive annual dynamics of the credit granted to the private sector.
The BNR experts believe that inflation will maintain its downward trend this year and next year as well. However, this tendency is going to be less significant in 2019. BNR Governor Mugur Isarescu has said the information is going to be confirmed in a week by the National Commission for Statistics.
Mugur Isarescu: “According to our forecast, inflation is going to continue on a downward trend in the months to come — and this is clearly mirrored in the data issued for next week — a significant drop in the inflation rate up to the interval’s higher ceiling of 3.5%. Data we have processed show this tendency is likely to continue next year as well, although to a lower extent; now we are going to see the sharpest drop from 5 to 3.5 and like I said, it will be felt next year as well.”
According to the BNR official, the inflation rate component, made up of the prices influenced by the monetary policy instruments, are already being reduced. This is — Isarescu explains — the inflation that remains after the elimination of the administered and volatile prices, the prices in tobacco products and drinks, upon which the influence of the monetary policy is less significant or even close to zero.
At domestic level, uncertainties and inflation-related risks have as their main source the prices in natural gas, electricity, food and tobacco as well as the labour market fluctuations, the fiscal and income policy — Mugur Isarescu explained. According to the BNR official, also relevant are foreign factors, such as fluctuations in fuel prices on the world’s market, the growth pace of the Eurozone and the global economy, against protectionist tendencies and Brexit uncertainties as well as the monetary policies of the European Central Bank and the central banks in the region.
In another development, the BNR governor hailed the way in which the analysis on Romania’s accession to the Eurozone is being carried out, and the fact that debates have been extended to the level of civil society, research institutes and universities. The National Committee created for this purpose is this month expected to present the timetable and the plan for the adoption of the European single currency.
