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May 17, 2022

ING: Central Bank likely to toughen its monetary policy

The National Bank of Romania (BNR) may toughen its monetary policy as the year goes along, which might come as a surprise to many market players, according to a report issued by the local ING Bank office, HotNews reports. According to the report, the BNR monetary policy interest rate would stand at 6.75 per cent in March 2012, while Reuters predicts a key interest rate of 6 per cent. RON consolidation against the Euro remains the most plausible short-term scenario, given the inflationist expectations and good performance by exports.

The document also puts the late-year inflation at 6.1 per cent, and 4.8 per cent in 2012 respectively. Also, the ING report holds that the BNR could use the exchange rate as a weapon against inflation. Depending on the kind of shocks that could happen next year, price hikes are likely to range 4 per cent to 7 per cent. “Even if the positive scenario of a favourable agricultural production happens to be the case, we don’t believe inflation will stay within the range set by the central bank,” the document also shows, which goes on saying that, “given 2012 is an electoral year, we don’t rule out resistance to tough adjustments energy price wise, even if minor adjustments would be the case”. The authors of the report view the decision to delay the rise in energy prices as leading to inflation being back into 2013, a post-election year, increasing the risk of double digit inflation.

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