The Board of Directors of the National Bank of Romania decided, in Monday’s meeting, to maintain the monetary policy interest rate at the level of 7% per year, as inflation slows down.

The key interest rate has been unchanged since January of this year, when the NBR increased the interest rate to 7% per annum, from 6.75% per annum.

According to the BNR, the annual inflation rate fell in June to 10.25%, in line with forecasts, from 10.64% in May, against the background of the accentuation of the decline in annual terms of fuel prices and the deceleration of the growth of processed food prices.

On the whole of the second quarter of 2023, the annual inflation rate thus considerably accelerated its decrease, as anticipated, reducing by 4.28 percentage points (from 14.53% in March). The decrease was also driven in this interval mainly by the dynamics of energy and fuel prices, which accentuated their downward trend, under the impact of the base effects, the evolution of the crude oil price and the electricity and natural gas price ceiling schemes, he explained BNR.

The new statistical data reconfirms the slowdown of economic growth in the first quarter of 2023 to 0.2%, from 1% in the previous three months (quarterly variation), an evolution that implies the relatively pronounced reduction of the aggregate demand surplus in this interval.

At the same time, the advance in annual terms of GDP decreased significantly in the first quarter of 2023, to 2.4%, from 4.5% in the fourth quarter of 2022.

The latest data indicate a modest growth of the economy in the II and III quarters of 2023, and more moderate than previously anticipated, implying the maintenance of the annual GDP dynamics at a relatively low level.