National Bank of Romania

May 5, 2016

Romania’s reserve requirement and monetary policy interest rate of 1.75% were not changed at the May meeting of the central bank board.  A released statement projected continuing negative CPI inflation (-3.0% in May) until July 2016 and rising thereafter in positive territory up to the upper half of the targeted corridor and reaching the peak two years from now.  A new inflation report will be published May 10, and the next scheduled policy meeting is on June 30.  Sub-zero inflation currently reflects a cuts in value added tax and other indirect taxes.  A released statement calls monetary policy “stimulative” and projects a continuing domestic demand-led expansion of demand and activity.  Declining labor productivity growth is augmenting upward pressure on wages.  The forecast is associated with significant uncertainties and risks, which Governor Isarescu enumerated at his press conference: “increasing fears over global economic growth, the situation in Greece, the upcoming referendum in the UK., the volatility of the financial markets, geopolitical tensions, the divergence of conduct in terms of monetary policies by major central banks of the world, and oil price developments.”

Copyright 2016, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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