Romania: National Bank of Romania leaves rates unchanged in October
Monetary policy rate left at 6.50%: At its meeting on 4 October, the National Bank of Romania decided to keep the monetary policy rate at 6.50%, the lending (Lombard) facility rate at 7.50% and the deposit facility rate at 5.50%. Most market analysts had anticipated the hold.
Rising inflation ahead and uncertain fiscal stance drove the decision: The Central Bank’s decision was primarily driven by domestic factors: Inflation is expected to stay higher than previously anticipated through end-2024 on sustained price pressures for food and energy. Moreover, a high level of uncertainty and risks stemming from the fiscal and income policy stance—amid upcoming elections—supported the decision to hold.
Most panelists see another cut this year: The Bank did not provide specific forward guidance but stated that it would closely monitor domestic and international macroeconomic developments for future monetary policy decisions. Half of our panelists see the Bank leaving unchanged the policy rate at the last meeting of 2024, scheduled for 8 November. Looking at 2025, our Consensus is for the Bank to deliver an additional 125 basis points of cuts by year-end.
Panelist insight: Commenting on the release, Goldman Sachs analysts Kevin Daly and Johan Allen stated:
“We continue to expect weakening inflation and a reduction of uncertainty to enable the NBR to cut by an additional 25bp this year.”
Meanwhile, Stefan Posea and Valentin Tataru, analysts at ING, were slightly more dovish:
“All in all, we expect the Bank to remain cautious for the rest of this year and keep rates in place until January 2025 at the earliest. […] We don’t exclude a 25bp rate cut in November – but in the absence of a higher-than-expected decline in September’s inflation and a cooling of the upside risks stemming from the Middle East conflict until then, this is not our base case. For 2025, we foresee a total of 100bp of rate cuts, taking the key rate to 5.50%.”