NBR is cautiously waiting again: interest rate remains at 6.25%

The National Bank yesterday maintained the monetary policy interest rate at 6.25% a year, breaking off the string of four consecutive cuts made since the beginning of the year, showing it prefers to wait and see what the effect of the VAT increase will be on the prices before making its next move.

The NBR says it will “vigilantly” monitor the progression of the world economy, but warns it cannot offset the price increase on short term, instead focusing its efforts on slowing down inflation on medium term. Over the last few days the central bank has, however, let the RON depreciate further than usual, even though the exchange rate increase is fuelling the price increase even more, choosing instead to keep interest rates stable on the monetary market.

“The probability of raising the monetary policy interest rate by the end of the year cannot, however, be ruled out, but I think such a decision will be carefully weighed. I think the monetary policy will seek to counter the negative effects of an inadequate fiscal-budgetary policy,” believes Florian Libocor, chief economist of the BRD.