In its today meeting, the Board of the National Bank of Romania decided to increase the monetary policy rate to 2.25 percent per annum from 2.00 percent per annum as of 8 February 2018, a press release informs, in line with analysts’ expectations.
At the same time, the central bank decided to raise the deposit facility rate to 1.25 percent per annum from 1.00 percent per annum and the lending facility rate to 3.25 percent per annum from 3.00 percent per annum as of Thursday.
Moreover, BNR Board decided to maintain the existing levels of minimum reserve requirement ratios on both leu- and foreign currency-denominated liabilities of credit institutions.
Last month, BNR has increased the monetary policy rate to 2.00 percent per annum, up from 1.75 percent.
UniCredit Bank analysts estimated recently that central bank would rise the key interest to 2.25 pc per year as a compensation for the increase of inflation and considering also the inflationist risks are increasing too. The specialists expect that the key interest go up to 3 percent until autumn this year.
Governor Mugur Isarescu explained central bank’s decision at a press conference in which he said that the price hikes will continue until Easter, although the most important price hikes have already taken place. Only towards the end of the year, it is expected that inflation will return to 1 pc target.
BNR has started a war against inflation, but there are also external influences which affects the central bank’s policy.
”We can not move without looking at the other states that have decided to raise the key interest. We believe that by year-end we will bring inflation back to targets,” central bank Governor Mugur Isarescu stated, adding: “We will intervene in the market, especially for banks with excess liquidity to place their money better. We will keep some flexibility to intervene when necessary”.
He also said the 3-month ROBOR Index, the average interest rate on which Romanian banks borrow from each other, will follow, in a certain period of time, the increase of the key interest rate on Wednesday, and therefore the RON-denominated loans will rise, marginally.