The Board of the National Bank of Romania (BNR) has decided on Thursday to maintain the key interest rate at 1.75 per cent per annum and to keep the current levels of the minimum reserve requirement ratios on both leu and foreign denominations of the credit institutions, a release by the central bank reads.
The BNR’s Board also decided the proper management of the banking system’s cash.
The key interest rate stays unchanged ever since May 2015.
The central bank’s Board has analysed and endorsed the Report upon inflation, August 2016, a document to be presented to the public in a press briefing on 8 August 2016.
According to a Bank’s release, the annual inflation rate was further negative, yet posted a 2.3 percentage point increase in June 2016 (to -0.7 percent from -3.0 percent in March 2016), as a result of the dropping-out of the first-round effect of broadening the scope of the 9 percent reduced VAT rate to all food items in June 2015.
The annual inflation rate remaining in negative territory is solely attributable to the effect induced by lowering the standard VAT rate from 24 percent to 20 percent in January 2016.
The average annual CPI inflation rate stood at -2.0 percent in June, while the average annual inflation rate based on the Harmonised Index of Consumer Prices, which is relevant for assessing convergence with the European Union, came in at -1.7 percent.
According to the same document, the economic growth sped up to 4.3 percent (annual change) in 2016 Q1, following the rapid expansion of domestic absorption, mainly of consumer demand, amid higher incomes of households, the easing of the fiscal policy stance and the consolidation seen by the dynamics of private sector credit. On the supply side, the tertiary sector became the most dynamic component, making a prevailing contribution to GDP growth.