NBR Board: to keep the monetary policy rate at 6.50 percent per annum; uncertainties regarding the evolution of the inflation rate

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Bucharest, January 15, 2025RBJ – According to a press release, in its meeting of January 15, 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 higher than expected over the past three months of 2024, up to 5.14 percent in December, from 4.62 percent in September. The advance versus end-Q3 was driven mainly by higher fuel prices – primarily as a result of the significant appreciation of the US dollar on the international financial market –, and to a small extent by the new increases in food prices, amid the severe drought in the summer of 2024 and the hike in some commodity prices.

At the same time, the annual adjusted CORE2 inflation rate saw a halt in its downward trend in 2024 Q4, remaining flat at 5.6 percent until December, i.e. a level similar to that at end-Q3. 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.

Annual inflation rate calculated based on the Harmonized Index of Consumer Prices (HICP – inflation indicator for EU Member States) went up to 5.5 percent in December from 4.8 percent in September 2024. Nevertheless, the average annual CPI inflation rate fell to 5.6 percent in December from 6.1 percent in September 2024. In turn, the average annual HICP inflation rate decreased to 5.8 percent in December 2024 from 6.4 percent in September.

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