Report of the National Bank of Romania on inflation
The governor of the National Bank of Romania Mugur Isărescu has presented a report on inflation.
Roxana Vasile, 10.08.2022, 14:00
If until about a year ago the reports of the National Bank of Romania – BNR were eagerly awaited especially by financial, banking or economic experts, or by journalists specializing in these fields, at present ordinary people are also trying to decode the ultra-specialized language of the periodic releases. They are among the big losers of a situation with multiple causes, a situation that, above all, has direct consequences on their daily lives: the huge increase in inflation. What does the latest BNR report, presented on Tuesday by Governor Mugur Isărescu, say? What Romanians actually feel daily in their own pockets: that the inflation rate has intensified its growth rate from April to June and exceeded 15 % against the background of the shocks caused by the skyrocketing energy and fuel prices or by the increase in the price of food products, in especially of the processed ones.
Also according to BNR, inflation would have reached 20% if the Government had not intervened and had not capped energy prices – a commodity that is part of all products. As for the future, we are going to have both good and bad news. Inflation is expected to decrease, but not as much as BNR had previously anticipated. More precisely, the national bank increased the inflation forecast for the end of this year to 13.9% and estimates an inflation of 7.5% for the end of next year. In May, BNR had estimated an inflation rate of 12.5% for the end of this year and 6.7% for 2023. In mid-2024, the inflation rate would be 2.3%. Strongly affected by the price increases are also the people with bank loans. In almost half of the cases, their rates are calculated based on the so-called Robor index. If in January, this Robor index was around 3%, currently it exceeds 8%, much more than the monetary policy interest rate decided by BNR, of 5.5%.
However, Governor Mugur Isărescu admits that it is neither pleasant nor easy to pay higher sums, but the central banks message to the population, for more than a year now, is that the period of low interest rates – as was during the pandemic – has passed. In normal periods, a monetary policy interest rate ranges between 3% and 6%, so Romanians should no longer count on a reduction of loan interest rates. Nevertheless Governor Isărescu himself admits that the Robor index has broken a real record, being too high. Under these circumstances, he conveyed a personal message to the banks as well: namely to look more carefully at the decisions of the National Bank. In other words, he hopes and does believe that the Robor index will decrease to the value of the monetary policy rate. (LS)
