According to the press release of National Bank of Romania published on 6th of November 2018, the main decisions of the Board of the National Bank of Romania are the following:
- to keep the monetary policy rate at 2.50 percent per annum;
- to leave unchanged the deposit facility rate at 1.50 percent per annum and the lending facility rate at 3.50 percent per annum;
- to maintain the existing levels of minimum reserve requirement ratios on both leu- and foreign currency-denominated liabilities of credit institutions.
The press release indicates that the annual CPI inflation rate dropped to 5.03 percent in September 2018 from 5.06 percent in August, standing slightly above the projected level following faster annual growth in vegetables prices. By contrast, the other consumer basket components posted lower annual dynamics.
The annual adjusted CORE2 inflation rate (which excludes from the CPI inflation a number of prices on which monetary policy has limited or no influence, i.e. administered prices, volatile prices, and tobacco product and alcoholic beverage prices) continued to fall, down to about 2.7 percent in September from 2.85 percent in August. The decline owed mainly to the processed food segment, under the influence of movements in international prices of some agri-food items.
The average annual CPI inflation rate reached 4.5 percent in September versus 4.2 percent in August; calculated based on the Harmonised Index of Consumer Prices, the average annual rate followed a similar path, rising to 3.8 percent from 3.5 percent in the previous month.
New data on economic growth reconfirm its marginal step-up to 4.1 percent year on year in 2018 Q2 from 4.0 percent in the previous quarter. On the demand side, the composition of GDP drivers saw a significant change, consisting mainly in an upward revision to 3.7 percentage points of the contribution of the change in inventories. Compared to 2018 Q1, household consumption recorded a slower annual pace of increase, whereas the path of gross fixed capital formation reversed, taking 1.1 percentage points off the real GDP advance. The contribution of net exports was further negative, but improved slightly against the previous data, as the growth rate of exports gained stronger momentum than that of imports.
The latest statistical data show mixed developments July through August compared to 2018 Q2: a faster annual increase in industrial output and slower growth in trade and services, while the volume of construction works declined in annual terms, particularly on account of the residential buildings segment, which was also affected by a strong base effect. At the same time, after having relatively stalled in 2018 Q2, the annual growth of unit wage costs in the industrial sector decelerated in the first two months of Q3, amid improved dynamics of labour productivity.
The relevant interbank money market rates saw their positive spread vis-à-vis the monetary policy rate widen slightly during October, while the EUR/RON exchange rate remained relatively stable.
The annual growth rate of credit to the private sector moderated slightly in September (to 6.3 percent, from 6.6 percent in August), as a result of slower dynamics of the leu-denominated component, on the back of housing loans and credit to non-financial corporations; conversely, the annual pace of increase of domestic currency-denominated consumer loans regained momentum to reach 13.3 percent. The share of the leu-denominated component in total private sector credit widened to 65.4 percent in September (from a 35.6 percent low in May 2012).
For further information: NBR Board decisions on monetary policy