The National Bank of Romania (BNR) has maintained its key interest rate unchanged at 1.75 per cent, and has also maintained unchanged the minimum reserve requirement ratio. The move was anticipated by the market, most economists being of the opinion that the acceleration of economic growth as well as the phenomenon of deflation will determine BNR to maintain its key interest rate and minimum reserve requirement ratio unchanged. We remind our readers that BNR’s Board of Directors held on Wednesday its seventh monetary policy meeting this year, the last but one meeting of its kind this year.
“Our expectations and the market’s expectations point to an unchanged key interest rate. The press conference that will follow the Board meeting could offer some clues on the monetary policy outlook. Still, there still are ambiguities in what concerns the public sector salary hikes, so we expect the Central Bank to remain in waiting. In conclusion, we continue to expect the RON to be traded under depreciation pressures, after it evolved better than regional currencies over the last week,” a report transmitted by ING economists to investors on Wednesday reads.
Adopting euro in 2019 no longer feasible
The target set for Romania to adopt the European single currency, namely the year 2019 is no longer feasible, and the National Bank of Romania (BNR, the central bank) will ask the Government and the Presidency that, before announcing a new date for entering the Eurozone, to set up a road map to be accepted through national consensus, BNR Governor Mugur Isarescu said on Wednesday.
‘The 2019 target is not feasible anymore, not only because time has passed, but because we should have joined the ERM [Exchange Rate Mechanism] II on January 1 2016, or June 1 2016 at the latest. The preparation for this antechamber is complicated,’ the BNR governor explained.
In his opinion, this is not possible anymore, not even technically, and even if Romania would join the ERM II by the next year’s half, there is another problem.
‘The two-year period a country should stay in this antechamber of the euro is the minimum. So, no one guarantees that we join the Eurozone in 2019 and I don’t believe this is the moment to push it,’ added Isarescu.
In this context, the BNR head warned that a road map is essential before announcing a new target.