National Bank of Romania

September 30, 2016

Officials at NBR consider monetary conditions appropriately stimulative. While today’s policy statement observes elevated uncertainties and notes that the latest on-year changes in total consumer prices and core components of the index are only -0.2% and +0.5%, the baseline outlook for inflation is a sanguine picture:

Recent assessments reconfirm the outlook for the annual inflation rate to remain in negative territory until end-2016. Thereafter, the annual inflation rate is expected to pick up gradually and return inside the variation band of the flat target in 2017 H2, amid the fading-out of the effects exerted by the standard VAT rate cuts and by global disinflationary shocks, along with inflationary pressures from aggregate demand and unit wage costs.

The last rate in the monetary policy rate was made in May 2015, a cut of 25 basis points to 1.75%. There were four such cuts in the first half of 2015 and five other reduction in 2014. The next policy review is scheduled November 4.

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

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