National Bank of Romania

May 7, 2018

Romania’s central bank Board hike the monetary policy rate by 25 basis points today to 2.50%. This action followed an initial 25-bp increase done in January. These two moves reverse half the total one percentage point rate reduction that occurred previously during the first five months of 2015. In a released statement, the move is justified because inflation is creeping higher. Such rose to 2.5% in March from 2.1% the month before and, looking ahead, is expected to surpass the target corridor ceiling for several months later this year. Core inflation has accelerated to 3.0%, buoyed by “pressures from excess aggregate demand in the economy, the rise in production costs (labour force, utilities), some influences exerted by the dynamics of the leu exchange rate, as well as the further upward adjustment of short-term inflation expectations.”

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



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