NBR: Resuming economic growth is up to Government

The National Bank yesterday left unchanged the key interest rate on RON-denominated loans at 6.25% per annum, as well as banks’ minimum reserve requirements, as analysts had unanimously anticipated, announcing it is focusing exclusively on countering inflationary pressures and leaving it solely in the hands of the Government to stimulate the economy.

“The NBR’s Board of Directors reiterates that inflation resuming a downward trend and a return to sustainable economic growth depend decisively on the firm and consistent implementation of fiscal consolidation measures, structural reforms and on increasing the rate of absorption of EU funds,” says the NBR management.
The decision failed to have an impact on interest rates or on quotes on the interbank forex market, with the euro climbing slightly, towards 4.29 RON yesterday.
“The bleak prospects for recovery and the one-off nature of the rise in inflation associated with the VAT hike lead us to believe that the NBR is likely to initiate an easing cycle in the second quarter of 2011 or even earlier,” comments Ilker Domac, analyst with Citibank Turkey.
The NBR also announced yesterday it had set the inflation target at 3% for 2012, plus/minus one percent. As of 2013, the central bank talks about a “stationary inflation target”, i.e. that it should remain stable over the next few years, at 2.5%, with the same variation range.