National Bank of Romania’s Key Interest Rate Restored to Pre-Pandemic Level
February 9, 2022
A 50-basis point increase in the National Bank of Romania‘s key interest rate to 2.5% restores such to its pre-pandemic level. The rate had been cut by fll percentage point in 202o and by an additional 25 basis points in January 2021. The low of 1.25% had been maintained for nine months, and today’s action was preceded by three 25-basis point increases in October, November, and January. According to a statement, Romanian growth last momentum in the second half of 2021, but the rise of inflation commands more immediate attention. CPI inflation of 8.2% in December was almost four times higher than at the end of 2020. Romania has experienced “a considerable worsening of the short-term outlook for inflation, under the strong impact of supply-side shocks, mainly of energy prices, as the forecasted path of the annual CPI rate has been again revised markedly upwards over the short-term horizon…. The NBR Board decisions aim to anchor inflation expectations over the medium term, as well as to foster saving through higher bank rates, so as to bring back the annual inflation rate in line with the 2.5 percent ±1 percentage point flat target on a lasting basis.”
Copyright 2022, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: National Bank of Romania
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