NBRs future monetary policy actions
The yesterday’s decision of the central bank surprised financial markets by leaving key rate and RRR unchanged. Economists had expected a quarter-point reduction in benchmark rate and in reserve requirements.
Bankers were the most disappointed by NBR’s actions, after putting their bets on a monetary policy rate and RRR cut, to reduce market interests, hoping the central bank would free more cash in the market.
“The National Bank of Romania has decided to leave monetary policy rate and reserve requirements unchanged, due to the uncertainties persisting in the market. The series of rate cut will be resumed when we will return within the parameters agreed with the International Monetary Fund, and when political commitments will be made to put an end to the growing uncertainties”, Ionut Dumitru, senior economist of Raiffeisen Bank told Wall-Street.
Yesterday, the central bank has also set the annual inflation target for 2011 at 3.0 percent with +/-percentage point tolerance band. The inflation target is to be discussed with the government.
The annual inflation rate fell to 4.94% in September, the lowest level since July 2007, but which remains high compared to other European Union countries.
“NBR’s rate moves came as a response to the growing pressures generated by the IMF deal over the exchange rates, and serve as a shield for the local currency. Next year, the central bank will continue this round of monetary easing when uncertainties will disperse”, Laurian Lungu, managing partner at Macroanalitica told Wall-Street.
Bankers were the most disappointed by NBR’s actions, after putting their bets on a monetary policy rate and RRR cut, to reduce market interests, hoping the central bank would free more cash in the market.
“The National Bank of Romania has decided to leave monetary policy rate and reserve requirements unchanged, due to the uncertainties persisting in the market. The series of rate cut will be resumed when we will return within the parameters agreed with the International Monetary Fund, and when political commitments will be made to put an end to the growing uncertainties”, Ionut Dumitru, senior economist of Raiffeisen Bank told Wall-Street.
Yesterday, the central bank has also set the annual inflation target for 2011 at 3.0 percent with +/-percentage point tolerance band. The inflation target is to be discussed with the government.
The annual inflation rate fell to 4.94% in September, the lowest level since July 2007, but which remains high compared to other European Union countries.
“NBR’s rate moves came as a response to the growing pressures generated by the IMF deal over the exchange rates, and serve as a shield for the local currency. Next year, the central bank will continue this round of monetary easing when uncertainties will disperse”, Laurian Lungu, managing partner at Macroanalitica told Wall-Street.