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BNR's Isarescu: We discussed a potential timetable for reducing the monetary policy rate
The Board of Directors of the National Bank of Romania (BNR) has discussed a potential timetable for reducing the monetary policy rate, but it takes two months to confirm that inflation is definitely coming down after a spike in January, BNR Governor Mugur Isarescu said on Thursday at a conference where he released the bank's latest monthly inflation report.
"I'm making one more comment here, because I understand that it concerns public opinion. With two inflation forecasts almost similar, from our point of view, so clearly downwards, and with the objective of reaching our (inflation) target - of course we also discussed a trajectory or, not to say forecast, a potential timetable for reducing the monetary policy interest rate. But mind you, we've had this trend upward since January. We need at least two months to confirm that inflation is really coming down. And let's not forget that we have adopted this policy of letting liquidity be absorbed daily at the deposit rate at 6%, not 7%. So basically, that's where we start calculating for more than a year. And the interest rates in the market, IRCC [consumer credit reference index] for a long time, but now also ROBOR [Romanian interbank offer rate], are around 6%," said Isarescu.
The annual inflation rate jumped to 7.41% in January 2024 from 6.61% in December 2023, as food prices rose by 5.64%, non-food prices by 7.36% and services by 10.91%, according to data with the National Institute of Statistics (INS) released on Wednesday.
The National Bank of Romania (BNR) has downwardly adjusted, to 4.7%, its inflation forecast for the end of 2024, from 4.8% in November 2023, expecting it to go down to 3.5% at the end of 2025, according to data released on Thursday by BNR Governor Mugur Isarescu.