The Board of Directors of the National Bank of Romania decided on Friday to reduce the monetary policy interest rate to 6.75% per year, from 7% per year, starting on July 8, 2024, the central bank informs.
At the same time, the BNR decided to lower the interest rate for the credit facility (Lombard) to 7.75% per year, from 8.00% per year, and the interest rate for the deposit facility to 5.75% per year, from 6.00% per year, but also the maintenance of the current levels of the mandatory minimum reserve rates for liabilities in lei and in foreign currency of credit institutions.
The monetary policy rate was unchanged since January last year, when the BNR increased the interest rate to 7% per annum from 6.75% per annum.
According to the BNR, the annual inflation rate accelerated its decline in the first two months of the second quarter of 2024, falling to 5.12% in May, below the forecast level, from 6.61% in March, mainly as a result of the cheapening substantial energy, especially natural gas, under the influence of the legislative changes applied since April, as well as against the background of the continued decrease in the dynamics of food prices, according to Agerpres.
The adjusted CORE2 annual inflation rate continued to decrease gradually, in line with forecasts, reducing to 6.3% in May, from 7.1% in March 2024. The deceleration also had as determinants in this interval effects of disinflationary basis and corrections of agri-food commodity quotations. Additional influences resulted from the drop in import price dynamics and from the re-entry into a slightly downward trend of short-term inflationary expectations. In the opposite direction, the new increases in unit labor costs recorded in the first months of the current year acted moderately, transferred, at least partially, to the prices of some goods and services, including against the background of robust and strongly growing consumer demand in April .
The annual inflation rate calculated on the basis of the harmonized index of consumer prices (IAPC – inflation indicator for EU member states) decreased to 5.8% in May 2024, from 6.7% in March 2024. At the same time, the average rate the annual CPI inflation and the average annual inflation rate calculated on the basis of the HICP decreased in May to 7.6%, from 8.5% and 8.3%, respectively, in March 2024, the central bank emphasizes, in the press release.
Economic activity grew by 0.4% in the first quarter of 2024, less than expected, after contracting by 0.6% in the fourth quarter of 2023, so the aggregate demand surplus is likely to have continued to narrow over this period, contrary to expectations .