In its meeting of July 1, the Board of the National Bank of Romania (BNR) decided to keep unchanged the monetary policy rate at 1.75 percent per annum, in line with analysts’ expectations, a press release informs.
The central bank also decided to pursue an adequate liquidity management in the banking system and to maintain the present levels of the minimum reserve requirements ratios on both leu-denominated and foreign-exchange denominated liabilities of credit institutions.
“BNR is closely monitoring the domestic and international developments in order to ensure an adequate use and dosage of its instruments in a bid to achieve the price stability objective in the medium term and maintain financial stability,” the release reads.
BNR Board decision was anticipated by analysts, amid the crisis in Greece. They actually estimate rate preservation to 1.75 percent by the end of the year, while next year the views range from a decrease to 1.5 percent and an increase of 2.5 percent.
The latest macroeconomic data point to the annual inflation rate remaining below the lower bound of the variation band of the flat target, along with the pick-up in economic growth in 2015 Q1, driven by stronger final consumption and investment.
In May 2015, the annual inflation rate climbed to a higher-than-expected 1.2 percent, as volatile prices saw a relative step-up in their annual increase, while the average annual inflation rate was stuck at 0.9 percent for the third month in a row. The average annual inflation rate based on the Harmonised Index of Consumer Prices, which is relevant for assessing convergence with the European Union, stayed put at 1.1 percent.
„BNR takes into account prudent reconsideration of monetary policy by the policy easing rescheduling, namely the alignment of minimum reserve requirement ratios at European level, whereas it has to balance fiscal program,” central bank Governor Mugur Isarescu said in a press conference.
Asked what a prudent reconsideration of monetary policy means cycle and how long will spread, Isarescu said the decision was taken in principle and the components of such a reconsideration refer to the levels which, ultimately, BNR aims regarding the rate monetary policy, the reserve ratio, the fluctuation corridor, as well as other indicators such as net debt.
The governor pointed out that it does not see, as much as it can be estimated in the current context, an immediate need for trend reversal of monetary policy easing.