Bucharest, February 14, 2025 – RBJ – In its meeting of 14 February 2025, the Board of the National Bank of Romania decided the following:
>>> to keep the monetary policy rate at 6.50 percent per annum;
>>> to leave unchanged the lending (Lombard) facility rate at 7.50 percent per annum and the deposit facility rate at 5.50 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 annual inflation rate rose above expectations over the last three months of 2024 to reach 5.14 percent in December, from 4.62 percent in September, mainly as a result of the pick-up in the prices of fuels, but also following new hikes in food prices amid the severe drought in the summer of 2024 and the rise in some commodity prices.
In turn, the annual adjusted CORE2 inflation rate saw a halt in its downward trend in 2024 Q4, remaining flat until December aThe Romanian Business Journalt the level posted at end-Q3, i.e. 5.6 percent. This was ascribable to the opposite influences coming over this period, on the one hand, from the disinflationary base effects in non-food sub-components and from the decline in import price dynamics, and, on the other hand, from the hike in some agri-food commodity prices, as well as from higher wage costs passed through, at least in part, into some consumer prices, inter alia amid still high short-term inflation expectations and a robust demand for goods.
In 2024, the 12-month inflation rate shed 1.47 percentage points (from 6.61 percent in December 2023), amid the drop in the annual adjusted CORE2 inflation rate by 2.8 percentage points (from 8.4 percent in December 2023), mainly on account of the non-food sub-group, the dynamics of which remained however elevated, the same as the growth rate of market services prices. Additional disinflationary influences stemmed from the slower growth rate of administered prices, while opposite effects came from the dynamics of fuel and energy prices and, to a lower extent, from the developments in VFE and tobacco product prices.
The annual inflation rate calculated based on the Harmonised Index of Consumer Prices (HICP – inflation indicator for EU Member States) went down to 5.5 percent in December 2024 from 7.0 percent in December 2023. The average annual CPI inflation rate dropped to 5.6 percent in December 2024 from 10.4 percent in December 2023. In turn, the average annual HICP inflation rate decreased to 5.8 percent in December 2024 from 9.7 percent in December 2023.
In January 2025, the annual inflation rate declined to 4.95 percent, primarily under the impact of substantial base effects visible in adjusted CORE2 inflation, whose annual rate decreased to 5.1 percent. Under the circumstances, the average annual CPI inflation rate fell to 5.4 percent in January 2025.
Preliminary data point to a stronger-than-envisaged quarterly growth of the economy in 2024 Q4 and to its sharp acceleration to 0.8 percent from 0.1 percent in the previous quarter. This implies a decline in the annual GDP dynamics to 0.7 percent in 2024 Q4 from 1.2 percent in the previous quarter amid mixed developments across aggregate demand components, as suggested by high-frequency indicators.
