For the eighth time this year, Romania’s National Bank decided to increase the monetary policy rate. This is Romania’s strategy to fight the galloping inflation.
In the meeting held today, 8 November 2022, based on the currently available data and assessments, as well as in light of the very elevated uncertainty, the NBR Board decided to increase the monetary policy rate to 6.75 percent per annum from 6.25 percent per annum as of 9 November 2022. Moreover, it decided to raise the lending (Lombard) facility rate to 7.75 percent per annum from 7.25 percent per annum and the deposit facility rate to 5.75 percent per annum from 5.25 percent, as well as to maintain firm control over money market liquidity. Furthermore, the NBR Board decided to keep the existing levels of minimum reserve requirement ratios on both leu- and foreign currency-denominated liabilities of credit institutions.National Bank of Romania press release
Moreover, the National Bank of Romania addresses the economy’s evolution concerns.
The number of employees in the economy stopped its increase in August, given the cut in the number of personnel in the private sector, while the ILO unemployment rate saw a renewed marginal advance at the end of Q3, after its decrease to 5.1 percent in August. At the same time, at the beginning of Q4, the labour shortage reported by companies remained flat at the lower level reached in the previous months, while hiring intentions for the near-term horizon recovered slightly, but in the context of mixed sectoral developments, probably explained by the very high energy costs, as well as by the uncertainties generated by the war in Ukraine and the related increasingly strict sanctions.NBR press release
Romania’s economy is struggling to fight double-digit inflation, but the National Bank is doing what is needed, taking one step at a time. By increasing the monetary policy rate, NBR tries to encourage deposits which will further discourage internal consumption and thus, inflation could be slowed down.