Citi: NBR will continue easing policy rate

The National Bank of Romania will continue easing monetary policy rate, on stronger-than-expected external adjustment coupled with the IMF/EU-led multilateral financial package. The policy rate may reach 7.25% by year-end, from the current 8.5%, Citi said in a report.

Citi expects a 50bp cut in NBR’s rate setting meeting scheduled for September 29, and by year-end the central bank is likely to bring its rate to 7.25%.

The very weak internal demand coupled with the excessive adjustment of the current account gap may encourage NBR to further ease its monetary policy.

Citi has also revised their forecast on the country’s economic contraction to 7.1% of GDP.

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