First Romanian Policy Interest Rate Hike since 2003

January 8, 2018

The first change of a key central bank interest rate was made by the National Bank of Romania, where the key policy rate, deposit facility rate, and lending facility rates were raised 25 basis points each to 2.0%, 1.0% and 3.0%. The policy interest rate had been at 1.75% since a 25-basis point reduction in May 2015, a move that culminated a string of many cuts. The previous Romanian policy rate hike had been a full-percentage point increase to 21.25% undertaken in November 2003. Romanian monetary officials had been edging toward today’s trend reversal by previously narrowing the lending/deposit rate corridor. Two months ago, the lending rate was reduced to 2.75% from 3.0%, while the deposit rate was increased to 0.75% from 0.50%.

The backdrop to today’s move was a noticeable acceleration of inflation and real growth. Total on-year CPI inflation picked up to 3.23% in November from 1.77% in September, and core rose in that period to 2.3% from 1.8%. GDP grew 8.8% in the year to 3Q17.

Copyright 2018, Larry Greenberg. All rights reserved. No secondary distribution without express permission.




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