The carefully curated platform, accessible through the official BNR website, presents comprehensive archival documents, historical narratives, and the latest updates on diplomatic efforts. It highlights Romania’s legal and historical claim, supported by signed international agreements and guarantees from that era, to reclaim the treasure unlawfully retained by Moscow.

Romanian officials, notably BNR Governor Mugur Isărescu, emphasise the symbolic and financial importance of the treasure to Romania’s national sovereignty and identity. The treasure’s return would represent the restitution of a key national asset rather than simply a financial transaction. Since 1991, the National Bank has actively pursued the treasure’s return through diplomatic and legal channels, with the digital platform marking a relaunch of these efforts to inform better the international community and decision-makers, including members of the European Parliament.

The issue has gained broader recognition in recent years, culminating in European Parliament resolutions calling on Russia to honour its obligations and return Romania’s gold and cultural assets. While partial cultural restitutions occurred during the Soviet period, the vast majority of the gold remains in Moscow. The digital platform supports ongoing dialogues, legal claims, and public campaigns aimed at pressuring Moscow to resolve this century-old dispute.

By providing public access to primary documents and fostering international attention, Romania’s National Bank hopes the platform will enhance efforts to secure the treasure’s return and preserve Romania’s cultural heritage. This initiative stands as a testament to Romania’s enduring commitment to justice and historical truth—a national journey that balances diplomatic perseverance with the preservation of collective memory.

This platform also educates the Romanian public, many of whom were unaware of the treasure’s full story, ensuring the legacy of this historic episode remains alive for future generations.

The National Bank’s pioneering digital platform is thus not just a tool for information but a powerful statement of Romania’s rightful claim and a call for international solidarity in resolving the unresolved appropriation of a national treasure.

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• To keep the monetary policy rate at 6.50 per cent per annum;
• to leave unchanged the lending (Lombard) facility rate at 7.50 per cent per annum and the deposit facility rate at 5.50 per cent 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 above expectations over the last three months of 2024 to reach 5.14 per cent in December, from 4.62 per cent in September, mainly as a result of the pick-up in the prices of fuels but also following new hikes in food prices amid the severe drought in the summer of 2024 and the rise in some commodity prices.

In turn, the annual adjusted CORE2 inflation rate slowed in its downward trend in 2024 Q4, remaining flat until December at the level posted at the end-Q3, i.e. 5.6 per cent. 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 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 robust demand for goods.

In 2024, the 12-month inflation rate shed 1.47 percentage points (from 6.61 per cent in December 2023), amid the drop in the annual adjusted CORE2 inflation rate by 2.8 percentage points (from 8.4 per cent in December 2023), mainly on account of the non-food-sub-group-dynamics of which remained however elevated, the same as the growth rate of market services prices. Additional disinflationary influences stemmed from the slower growth rate of administered prices. In contrast, opposite effects came from the dynamics of fuel and energy prices and, to a lesser extent, from the developments in VFE and tobacco product prices.

The annual inflation rate calculated based on the Harmonised Index of Consumer Prices (HICP – inflation indicator for the EU Member States) went down to 5.5 per cent in December 2024 from 7.0 per cent in December 2023. The average annual CPI inflation rate dropped to 5.6 per cent in December 2024 from 10.4 per cent in December 2023. In turn, the average annual HICP inflation rate decreased to 5.8 per cent in December 2024 from 9.7 per cent in December 2023.

In January 2025, the annual inflation rate declined to 4.95 per cent, primarily under the impact of substantial base effects visible in adjusted CORE2 inflation, whose annual rate decreased to 5.1 per cent. Under the circumstances, the average annual CPI inflation rate fell to 5.4 per cent in January 2025.

The preliminary data point to a stronger-than-envisaged quarterly growth of the economy in 2024 Q4 and to its sharp acceleration to 0.8 per cent from 0.1 per cent in the previous quarter. This implies a decline in the annual GDP dynamics to 0.7 per cent in 2024 Q4 from 1.2 per cent in the previous quarter amid mixed developments across aggregate demand components, as suggested by high-frequency indicators.

Thus, the growth rate of retail sales accelerated in 2024 Q4 as a whole, while the volume of construction works posted a visibly steeper decline in October-November compared to the same year-earlier period. In 2024 Q4, the annual change in exports of goods and services further narrowed its unfavourable differential with that in imports, which contracted somewhat more markedly. Against this background, the trade deficit continued to see a slower annual increase, whereas the current account deficit recorded a considerable swifter widening amid the sharp deterioration of income balances. 

Looking at the labour market, the number of employees economy-wide picked up faster in October-November 2024 than in the prior quarter, while the ILO unemployment rate fell over the last three months of 2024 to 5.2 per cent in December after rising to an average of 5.6 per cent in Q3. Furthermore, the surveys indicate that employment intentions over the very short horizon saw a significant recovery in January 2025, after a three-quarter decline, while the labour shortage reported by companies widened, reversing almost entirely the marked contraction seen in the last quarter of 2024. The annual growth rate of the nominal gross wage and, in particular, that of unit labour costs in the industry declined in 2024 Q4 yet remained in the two-digit range after rising to 16.7 per cent and 18.6 per cent, respectively, in the previous quarter.

The primary interbank money market rates witnessed mild increases in the second 10-day period of January 2025 and then held relatively steady. Long-term yields on government securities extended their steep upward course in the first part of January before posting a sharp downward correction towards the end of the month, reflecting the improvement in the global risk appetite but also amid the lowering of financial investor concerns about budget consolidation prospects after the authorities announced the draft budget coordinates for 2025. Against this background, the EUR/RON exchange rate remained broadly stable in January 2025 at the higher values it had returned to in mid-Q3 of 2024. Concerning the US dollar, the leu continued to weaken relatively swiftly in the first part of January. Still, it recovered the ground lost due to the former’s performance in international financial markets. 

The annual growth rate of credit to the private sector edged up in December 2024 to 8.9 per cent from 8.8 per cent in November, as the further step-up in the dynamics of household credit was accompanied by a standstill in the pace of increase of loans to non-financial corporations. The share of the domestic currency component in credit to the private sector halted its upward trend, narrowing to 70.1 per cent in December 2024 from 70.2 per cent in November.

In today’s meeting, the NBR Board examined and approved the February 2025 Inflation Report, incorporating the latest available data and information.

According to the updated forecast, the annual inflation rate will fluctuate markedly in 2025 H1 – amid the two-way base effects that will be manifest over this time horizon –before declining in H2 on a higher path than in the prior projection, staying above the variation band of the target until end-2025. Moreover, after falling in the early months of 2026 slightly below the upper bound of the target band, the annual inflation rate will remain constant until the end of the forecast horizon, only marginally lower than previously projected.

The decrease will be driven by disinflationary base effects and influences coming from the deceleration in import price growth and the downward adjustment of short-term inflation expectations, on a higher path, however, than in the previous projection. These will add the lagged disinflationary effects from the negative output gap, which is anticipated to open and widen moderately during the current year but to narrow gradually afterwards.

Uncertainties and risks further stem from the future fiscal policy stance, given, on the one hand, the presumed impact of the corrective fiscal and budgetary measures implemented or adopted so far and, on the other hand, the budget consolidation requirement according to the National Medium-Term Fiscal-Structural Plan agreed with the European Commission and to the excessive deficit procedure.

Labour market conditions and wage dynamics in the economy also remain a source of uncertainties and risks. Moreover, significant uncertainties are further associated with the growth rates of energy and food prices and the future path of crude oil prices. At the same time, notable risks come from the expansion trend of trade protectionism, potentially impacting other commodity prices and the prices of some intermediate and final goods.

Heightened uncertainties and risks to the outlook for economic activity, implicitly the medium-term inflation developments, arising from the war in Ukraine and the situation in the Middle East, but especially from developments in the global/euro area economy and in international trade amid the trade policy measures of the US administration. Furthermore, the absorption and use of EU funds, especially those under the Next Generation EU programme, are conditional on fulfilling strict milestones and targets. However, they are essential for carrying out the necessary structural reforms, including energy transition and counterbalancing, at least in part, the contractionary impact exerted by geopolitical conflicts and budget consolidation.

The ECB’s and the Fed’s monetary policy decisions and the stance of central banks in the region are also relevant.

Based on the currently available data and assessments and the elevated uncertainty, the NBR Board decided in the meeting today, 14 February 2025, to keep the monetary policy rate at 6.50 per cent per annum. Moreover, it decided to leave unchanged the lending (Lombard) facility rate at 7.50 per cent per annum and the deposit facility rate at 5.50 per cent per annum. Furthermore, the NBR Board decided to maintain the existing minimum reserve requirement ratios on credit institutions’ leu- and foreign currency-denominated liabilities.

The NBR Board decisions aim to ensure and maintain price stability over the medium term, in a manner conducive to achieving sustainable economic growth. The NBR Board reiterates that, at the current juncture, the balanced macroeconomic policy mix and the implementation of structural reforms, as by using EU funds to foster the growth potential over the long term, are of the essence in preserving a stable macroeconomic framework and strengthening the capacity of the Romanian economy to withstand adverse developments.

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• to cut the monetary policy rate to 6.50 percent per annum from 6.75 percent per annum starting 8 August 2024;
• to lower the lending (Lombard) facility rate to 7.50 percent per annum from 7.75 percent per annum and the deposit facility rate to 5.50 percent per annum from 5.75 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 continued to decline in June 2024, down to 4.94 percent, below the forecast, from 5.12 percent in May. This was due to decreases in core inflation and fuel price dynamics, which were partly counterbalanced in terms of impact by the increase in natural gas prices.

Compared to March, the annual inflation rate went down in June by more than expected, i.e. by 1.67 percentage points (from 6.61 percent), mainly due to the notable drop in energy prices, especially natural gas prices, in 2024 Q2 overall, following the legislative changes implemented as of April, as well as amid the further deceleration in the growth rate of food prices.

At the same time, the annual adjusted CORE2 inflation rate fell faster in Q2, compared with the forecasts, down to 5.7 percent in June from 7.1 percent in March 2024. Behind the deceleration stood, during this period, disinflationary base effects and downward corrections of commodity prices. Additional influences stemmed from the decreasing dynamics of import prices and the short-term inflation expectations resuming a slight downward trend. A moderate opposite impact was the hikes in unit labour costs recorded in the first months of 2024, which passed through, at least in part, into some consumer prices, among other things, amid a robust demand for goods.

The annual inflation rate calculated based on the Harmonised Index of Consumer Prices (HICP—inflation indicator for the EU Member States) decreased to 5.3 percent in June from 6.7 percent in March 2024. The average annual CPI inflation rate fell to 7.2 percent in June from 8.5 percent in March 2024. The average annual HICP inflation rate decreased to 7.3 percent in June 2024 from 8.3 percent in March 2024.

Economic activity expanded by 0.7 percent in 2024 Q1, to a lower extent than anticipated, which suggests that excess aggregate demand will likely have further narrowed over this period, contrary to expectations.

Moreover, annual GDP growth contracted markedly in 2024 Q1 to 0.5 percent from 3.0 percent in the previous three months. The decline was driven this time round mainly by gross fixed capital formation, whose annual dynamics plummeted from the very high two-digit level seen in 2023 Q4. Household consumption continued to witness a faster annual rise.

Net exports exerted a more considerable contractionary influence in 2024 Q1 against the backdrop of a slight pick-up in the differential between the positive dynamics of the import volume of goods and services and the negative change in the export volume. The annual growth rate of the trade deficit picked up only marginally. At the same time, the current account decreased considerably from the previous quarter, given, among other things, the enormously faster annual increase in the secondary income surplus, mainly due to inflows of EU funds to the current account.

The latest data and analyses point to a more robust quarter-on-quarter economic growth in 2024 Q2 than previously anticipated, implying a marked step-up in the annual GDP dynamics.

Thus, in April-May, the annual growth rate of retail sales and that of motor vehicles and motorcycles sales picked up as compared to Q1, the manufacturing output saw a slight rebound, and the dynamics of the volume of construction works climbed markedly into positive territory, after falling to a significant negative value in the first three months of 2024 overall. However, the annual change in the imports of goods and services further posted a more significant positive differential with that in exports, seeing a more substantial increase. Consequently, the trade and current account deficits recorded a significantly faster deepening in April-May than in the same year-ago period.

Looking at the labour market, in May 2024, the number of employees economy-wide recorded a strong contraction after the substantial rise in April, while the ILO unemployment rate picked up gradually in April-June to 5.5 percent, standing below the 5.6 percent average seen in 2023 H2. At the same time, the surveys indicated more moderate employment intentions over the very short horizon in July than in Q2, as well as a declining labour shortage, in contrast to the rising shortage reported by companies in the first two quarters of 2024. The two-digit annual growth rate of the nominal gross wage, particularly that of unit labour costs in the industry, went down in April-May overall, remaining however high.

The main interbank money market rates declined in the first ten days of July due to NBR cutting the key interest rate, and the interest rates on its standing facilities remained steady afterwards. At the beginning of the month, long-term yields on government securities re-embarked and stayed on a generally downward path, which was relatively in line with developments in advanced economies and the region. This occurred amid investors’ revised expectations on the Fed’s interest rate path, impacting global risk appetite. Against this background, the EUR/RON exchange rate witnessed a downward correction in the first part of July and remained relatively stable. Towards the end of the month, it climbed to the higher values prevailing in Q2 amid the increased international financial market volatility following the escalation of tensions in the Middle East.

The annual growth rate of credit to the private sector picked up to 6.7 percent in June from 5.7 percent in May, as the domestic currency component continued to accelerate its rate of increase, primarily on account of developments in credit to non-financial corporations, while the dynamics of foreign currency credit remained on a mildly upward, albeit fluctuating, path. Against this backdrop, the share of leu-denominated loans in credit to the private sector widened to 69.1 percent in June from 68.8 percent in May.

In today’s meeting, the NBR Board examined and approved the August 2024 Inflation Report, incorporating the latest available data and information.

The updated forecast sees the annual inflation rate going down further on a lower path than that shown in the previous projection, especially in the near run. Specifically, the annual inflation rate is envisaged to decline, at end-2024 and in 2025 Q1, to significantly lower values than previously anticipated, while after a temporary pick-up in 2025 Q2, it is expected to return and remain until the end of the projection horizon slightly below the upper bound of the variation band of the target, and implicitly at somewhat lower than previously forecasted levels.

The drop in the annual inflation rate will be further driven by supply-side factors, whose disinflationary action will continue to be stronger over the short term than anticipated earlier due to the impact exerted by base effects and the legislative changes in the energy sector. This will add the influences expected throughout the forecast horizon from the decrease in short-term inflation expectations, the deceleration in import price growth, and the very mild contraction of excess aggregate demand, which is relatively in line with the previous forecasts.

Heightened uncertainties and risks stemming from the fiscal and income policy stance, given on the one hand, the budget execution in the first six months of the year, the public sector wage dynamics and the full impact of the new law on pensions and the other hand the fiscal and budgetary measures that could be implemented in the future to carry on budget consolidation, in the context of the medium-term fiscal-structural plan expected to be submitted to the EC in the autumn of this year. The economy’s labour market conditions and wage dynamics also remain a source of sizeable uncertainties and risks. At the same time, significant uncertainties are associated with developments in energy and food prices amid the legislative changes and the protracted drought this year, as well as with the future evolution of crude oil prices amid geopolitical tensions.

Uncertainties and risks to the outlook for economic activity, implicitly the medium-term inflation developments, also continue to arise from the war in Ukraine and the Middle East conflict, as well as from the economic performance in Europe. Furthermore, the absorption of EU funds, especially those under the Next Generation EU programme, is conditional on fulfilling strict milestones and targets. However, this is essential for carrying out the necessary structural reforms, including energy transition and counterbalancing, at least in part, the contractionary impact of geopolitical conflicts.

The ECB’s and the Fed’s monetary policy decisions and the stance of central banks in the region are also relevant.

Given the significant improvement in the near-term inflation outlook versus the previous projection, but also amid the still elevated uncertainty surrounding forecasts over the longer time horizon, the NBR Board decided to cut the monetary policy rate to 6.50 percent per annum from 6.75 percent per annum, starting 8 August 2024. Moreover, it decided to lower the lending (Lombard) facility rate to 7.50 percent per annum from 7.75 percent per annum and the deposit facility rate to 5.50 percent from 5.75 percent per annum. Furthermore, the NBR Board decided to keep the existing minimum reserve requirement ratios on credit institutions’ leu and foreign currency-denominated liabilities.

The NBR Board’s decisions aim to ensure and maintain price stability over the medium term in a manner conducive to achieving sustainable economic growth. The NBR Board reiterates that, at the current juncture, the balanced macroeconomic policy mix and the implementation of structural reforms, as by using EU funds to foster the growth potential over the long term, are of the essence in preserving a stable macroeconomic framework and strengthening the capacity of the Romanian economy to withstand adverse developments.

The NBR closely monitors developments in the domestic and international environment and stands ready to use its tools to achieve the fundamental objective of medium-term price stability while safeguarding financial stability.

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• to keep the monetary policy rate at 7.00 percent per annum;
• to leave unchanged the lending (Lombard) facility rate at 8.00 percent per annum and the deposit facility rate at 6.00 percent per annum;
• to keep the existing levels of minimum reserve requirement ratios on both leu- and foreign currency-denominated liabilities of credit institutions.

The 12-month inflation rate fell to 6.61 percent in March 2024 from 7.23 percent in February, mainly following the slowdown in the growth rate of food prices.

Thus, in March, the annual inflation rate returned to the level seen at end-2023, as the impact of the increases in the dynamics of electricity, fuel and tobacco product prices in 2024 Q1 overall was counterbalanced by the deceleration of core inflation and the decline in the dynamics of VFE prices.

The annual adjusted CORE2 inflation rate decreased in the first three months of 2024, albeit slower than in the previous two quarters, falling to 7.1 percent in March 2024 from 8.4 percent in December 2023. Behind the deceleration stood, during this period, disinflationary base effects, corrections of agri-food commodity prices, the measure to cap the mark-ups on essential food products, and the decreasing dynamics of import prices. The impact of these factors was mitigated by the fiscal measures implemented at the beginning of this year and by higher short-term inflation expectations. To these added the influences exerted by wage cost increases that occurred towards the end of last year, which were passed through, at least in part, into the prices of some services and non-food items, among other things, amid the rebound in private consumption.

The annual inflation rate calculated based on the Harmonised Index of Consumer Prices (HICP – inflation indicator for the EU Member States) went down to 6.7 percent in March 2024 from 7.0 percent in December 2023. Moreover, the average annual CPI inflation rate dropped 8.5 percent in March 2024 from 10.4 percent in December 2023. The average annual HICP inflation rate decreased to 8.3 percent in March 2024 from 9.7 percent in December 2023.

The new statistical data reconfirm the 0.5 percent contraction in economic activity in 2023 Q4 against the previous quarter and the advance in its annual dynamics to 3.0 percent from 1.9 percent in 2023 Q3.

Based on the new data, the pick-up in the annual growth rate of GDP owed to all domestic demand components, but especially to gross fixed capital formation, whose two-digit annual dynamics almost doubled during this quarter to 21.4 percent. Household consumption also significantly contributed, with its year-on-year increase posting a re-acceleration.

However, the contribution of net exports saw a renewed muscular contraction in 2023 Q4, given that the annual change in the import volume of goods and services went up much more substantially, re-entering positive territory and, therefore, outpacing that of the export volume. Consequently, the trade deficit and the current account deficit posted an annual increase during this period – after three-quarters of a decline – that, in the latter’s case, was amplified by the marked worsening of the primary income balance. Nevertheless, in 2023 overall, both deficits narrowed visibly versus 2022, with the current account deficit-to-GDP ratio shrinking to 7.0 percent from 9.2 percent.

The latest data and analyses point to notable economic growth in the first months of 2024 compared to 2023 Q4, implying a drop in the annual GDP dynamics during this period amid divergent developments in aggregate demand components and significant sectors.

Thus, in the first two months of this year, the annual growth rate of retail sales surged, whereas that of motor vehicle and motorcycle sales decreased slower than the previous quarter’s average. Conversely, industrial output continued to report a year-on-year contraction during this period. However, it posted a mild recovery in February, whereas the volume of construction works declined sharply from the same year-ago period after six consecutive quarters of double-digit growth. At the same time, the annual dynamics of imports of goods and services continued to outpace those of exports, so the trade deficit saw a mildly faster annual increase from January through February 2024. By contrast, the current account deficit recorded a significantly slower annual growth due to the improvement in the secondary income balance due to inflows of EU funds to the current account.  

Looking at the labour market, the incoming data show a visibly slower monthly increase in the number of employees economy-wide in February and a significant drop in the ILO unemployment rate in March after several quarters of relative stagnation at an average 5.6 percent level. At the same time, the two-digit annual growth rate of the nominal gross wage continued to rise in January-February 2024, while that of unit labour costs in industry decreased only slightly compared to the previous quarter’s average, remaining very high. Moreover, the surveys indicate that employment intentions rose in April for the third month, mainly in trade and services. Meanwhile, the labour shortage reported by companies widened further, albeit more moderately and with a significant contribution from construction.

The central interbank money market rates remained stable in April, while long-term yields on government securities rose more steeply, in line with developments in advanced economies and the region. This occurred amid investors reconsidering the Fed’s interest rate’s probable path but following the stronger tensions in the Middle East that affected the global risk appetite. Against this background, in the second part of April, the EUR/RON exchange rate returned to and stabilized at the higher readings it had temporarily climbed to in January.

The annual growth rate of credit to the private sector fell further in March 2024, albeit at a visibly slower pace, reaching 4.7 percent from 4.9 percent in February, as the new relatively sharp decrease in the dynamics of the foreign currency component during this month was accompanied by the mild acceleration in the rate of increase of domestic currency credit. Against this backdrop, the share of leu-denominated loans in credit to the private sector widened to 68.9 percent in March from 68.7 percent in February. 

In today’s meeting, the NBR Board examined and approved the May 2024 Inflation Report, incorporating the latest available data and information.

The updated forecast sees the annual inflation rate going down further over the following eight quarters much more slowly compared to 2023 and on a somewhat higher path in the short run than that shown in the previous projection. Thus, the annual inflation rate is expected to stand in December 2024 above the previous forecast and to fall only marginally inside the variation band of the target at the end of the projection horizon (March 2026).

The decrease will continue to be driven by supply-side factors, mainly disinflationary base effects and downward adjustments in commodity prices, whose disinflationary action will weaken progressively and more markedly over the short term than anticipated earlier. These add to the influences expected from the deceleration of import price dynamics, the gradual softening of short-term inflation expectations, and the prolonged contraction of excess aggregate demand over the next two years, which aligns with previous forecasts.

Heightened uncertainties and risks are associated with the fiscal and income policy stance, considering, on the one hand, the budget execution in the first three months of the year, the public sector wage dynamics and the full impact of the new law on pensions, and on the other hand the additional fiscal and budgetary measures that might be implemented in the future to carry on budget consolidation, among other things amid the excessive deficit procedure and the conditionalities attached to other agreements signed with the EC. The economy’s labour market conditions and wage dynamics are also a source of sizeable uncertainties and risks.

Nevertheless, uncertainties and risks to the outlook for economic activity, implicitly the medium-term inflation developments, also continue to arise from the war in Ukraine and the Middle East conflict, as well as from the economic performance in Europe, particularly Germany. Furthermore, the absorption of EU funds, especially those under the Next Generation EU programme, is conditional on fulfilling strict milestones and targets. However, this is essential for carrying out the necessary structural reforms, including energy transition and counterbalancing, at least in part, the contractionary impact of geopolitical conflicts.

The ECB’s and the Fed’s prospective monetary policy stances and the conduct of central banks in the region are also relevant.

In the meeting held today, 13 May 2024, based on the currently available data and assessments and in light of the elevated uncertainty, the NBR Board decided to keep the monetary policy rate at 7.00 percent per annum. Moreover, it decided to leave the lending (Lombard) facility rate unchanged at 8.00 percent per annum and the deposit facility rate at 6.00 percent per annum. Furthermore, the NBR Board decided to keep the existing minimum reserve requirement ratios on credit institutions’ leu- and foreign currency-denominated liabilities.

The NBR Board decisions aim to bring the annual inflation rate back in line with the 2.5 percent ±1 percentage point flat target on a lasting basis, among other things, by anchoring inflation expectations over the medium term in a manner conducive to achieving sustainable economic growth. At the current juncture, the balanced macroeconomic policy mix and the implementation of structural reforms, as using EU funds to foster the growth potential over the long term, are of the essence in preserving a stable macroeconomic framework and strengthening the capacity of the Romanian economy to withstand adverse developments.

The NBR closely monitors developments in the domestic and international environment and will continue to use the tools at its disposal to achieve the fundamental objective of price stability in the medium term.

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Non-residents’ direct investment in Romania totalled EUR 583 million (compared with EUR 596 million in January 2023), of which equity (including the estimated net reinvestment of earnings) and intercompany lending recorded net values of EUR 697 million and EUR -114 million, respectively.

In January 2024, total external debt increased by EUR 4,314 million to EUR 173,126 million, of which:

• long-term external debt in end-January 2024 ran at EUR 125,244 million (72.3 percent of total external debt), up 3.4 percent against end-2023;
• short-term external debt at end-January 2024 amounted to EUR 47,882 million (27.7 percent of total external debt), up 0.5 percent from end-2023.

The long-term external debt service ratio stood at 11.2 percent in January 2024, compared to 17.4 percent in 2023. At the end of January 2024, goods and services import cover ran at 6.3 months, compared to 5.6 months at the end of 2023.

At the end of January 2024, the National Bank of Romania’s foreign exchange reserves ratio to short-term external debt by remaining maturity was 99.9 percent, as against 97.4 percent at the end of 2023.

The post Romania: Living On Credit appeared first on Valahia.News.

• to keep the monetary policy rate at 7.00 percent per annum;
• to leave unchanged the lending (Lombard) facility rate at 8.00 percent per annum and the deposit facility rate at 6.00 percent per annum;
• to keep the existing levels of minimum reserve requirement ratios on both leu- and foreign currency-denominated liabilities of credit institutions.

The annual inflation rate posted a faster-than-expected decrease in the first two months of 2023 Q4, falling to 6.72 percent in November from 8.83 percent in September, amid the continued slowdown in the growth rate of food and energy prices, as well as following the decline in fuel prices, under the impact of lower crude oil prices.

At the same time, the annual adjusted CORE2 inflation rate saw its downward trend steepen more than anticipated, shrinking to 9.1 percent in November from 11.3 percent in September, against the background of more widespread disinflationary base effects, ebbing agri-food commodity prices and the measure to cap the mark-ups on essential food products, but also in the context of the slower dynamics of import prices.

The annual inflation rate calculated based on the Harmonised Index of Consumer Prices (HICP – inflation indicator for the EU Member States) went down to 6.9 percent in November from 9.2 percent in September 2023. Furthermore, in November, the average annual CPI inflation rate and the average HICP inflation rate fell to 11.2 percent and 10.3 percent, respectively, from 12.6 percent and 11.4 percent, respectively, in September.

Economic growth slowed down significantly in 2023 Q3, to 0.9 percent from 1.6 percent in the previous three months (quarterly change), yet to a lower extent than anticipated, which makes it likely for excess aggregate demand to narrow more moderately over this period compared to expectations.

In comparison to the same year-ago period, GDP growth rose marginally in Q3, to 1.1 percent from 1.0 percent in Q2, thus remaining modest from a historical perspective, as the change in inventories increased its already powerful contractionary impact, and the contribution of general government consumption became slightly negative. However, gross fixed capital formation saw a re-acceleration in its annual growth to double-digit readings in 2023 Q3, while household consumption posted an annual pick-up after the stagnation in the previous quarter. At the same time, net exports continued to exert a more considerable expansionary impact, given the further widening of the positive differential between the dynamics of exports of goods and services, in terms of volume, and those of imports, amid the latter falling more visibly into negative territory. Consequently, the trade deficit saw a renewed, slightly faster annual decline. In contrast, the current account deficit posted further a significant year-on-year narrowing, albeit somewhat more modest than in Q2, given the slower pace of improvement in the primary income balance in Q3, on account of reinvested earnings.

The latest data and analyses point to a mild slowdown in the quarterly growth rate of GDP in 2023 Q4, implying a more robust annual economic growth over this period than previously forecasted.

Thus, compared to the Q3 average, in October 2023, the annual positive dynamics of retail sales and services to households saw a re-acceleration. Meanwhile, the still annual solid growth rate of motor vehicle and motorcycle sales decreased visibly slower. At the same time, industrial output reported a markedly lower year-on-year contraction. In contrast, the volume of construction works continued to expand at a two-digit annual rate, albeit slower than in Q3. Moreover, the annual nominal change in the exports of goods and services exceeded further that of imports, although to a considerably lower extent than in the previous quarters. Against that background, the trade deficit saw a significantly slower annual decline in October. In contrast, the current account deficit posted a notable rise due to the steep worsening in the primary income balance, narrowing further for the first ten months of the year overall.

Looking at the labour market, recent data show a halt in the monthly increase in the number of employees economy-wide in September-October and relative stability of the ILO unemployment rate, including in November, alongside a further slight downward trend in October in the annual dynamics of unit labour costs in industry, that remain however at an exceptionally high two-digit level. The surveys indicate that employment intentions over the very short horizon declined faster in 2023 Q4, while the labour shortage reported by companies narrowed significantly, mainly reversing the rise seen in the previous quarter on account of developments in industry and services.

The central interbank money market rates posted new slight declines in the first part of November 2023 before remaining relatively stable, while yields on government securities rose abruptly in mid-Q4 but resumed and steepened their decrease afterwards, in line with developments in advanced economies and the region. This occurred amid investors’ revised expectations on the timing of the Fed’s decision to start the interest rate-cutting cycle, with an impact on global risk appetite as well.

Against this background, but also given the still high relative attractiveness of investments in domestic currency, the EUR/RON exchange rate remained relatively stable in November and December. Regarding the US dollar, the leu strengthened during both months due to the former’s gradual weakening of international financial markets in this period.

The annual growth rate of credit to the private sector halted its downtrend at the onset of 2023 Q4, posting mild pick-ups in October and November to reach 5.4 percent from 4.5 percent in September, as the new sizeable declines in the dynamics of the foreign currency component were more than offset by the re-acceleration of the pace of increase of credit in lei. Therefore, the share of leu-denominated loans in credit to the private sector resumed its advance to 68.5 percent in November from 68.1 percent in September.

According to current assessments, the annual inflation rate will go up in January 2024 and then resume its gradual decline on a lower path than that shown in the November 2023 medium-term forecast. The step-up will be driven by the increase and introduction of some indirect taxes and charges aimed at furthering budget consolidation in January. Behind the subsequent fall in the inflation rate will further stand primarily supply-side factors – especially disinflationary base effects and downward corrections of agri-food commodity prices and crude oil prices – as well as the decreasing dynamics of import prices.

Uncertainties and risks to the inflation outlook stem from the complete package of fiscal and budgetary measures implemented recently to underpin the budget consolidation process and from the measure to cap the markups on essential food products due to end in February 2024.

Significant uncertainties and risks are associated with the future fiscal and income policy stance, given the 2023 budget execution and the coordinates of the budget programme approved for 2024, as well as the implications of the new legislation on pensions and the wage dynamics in the public sector, which could call for prospective add-ons to the package of corrective fiscal and budgetary measures, among other things amid the excessive deficit procedure and the conditionalities attached to other agreements signed with the EC.

Uncertainties and risks to the outlook for economic activity, implicitly the medium-term inflation developments, continue to arise from the war in Ukraine and the Middle East conflict, as well as from below-expectations economic performance in Europe, especially in Germany. Furthermore, the absorption of EU funds, especially those under the Next Generation EU programme, is conditional on fulfilling strict milestones and targets. However, this is essential for carrying out the necessary structural reforms, including energy transition and counterbalancing, at least in part, the contractionary impact exerted by geopolitical conflicts and tightening economic and financial conditions worldwide.

Also relevant are the ECB’s and the Fed’s prospective monetary policy stances and the conduct of central banks in the region.

In the meeting held today, 12 January 2024, based on the currently available data and assessments and in light of the elevated uncertainty, the NBR Board decided to keep the monetary policy rate at 7.00 percent per annum. Moreover, it decided to leave the lending (Lombard) facility rate unchanged at 8.00 percent per annum and the deposit facility rate at 6.00 percent per annum. Furthermore, the NBR Board decided to keep the existing minimum reserve requirement ratios on credit institutions’ leu- and foreign currency-denominated liabilities.

The NBR Board decisions aim to bring the annual inflation rate back in line with the 2.5 percent ±1 percentage point flat target on a lasting basis, among other things, by anchoring inflation expectations over the medium term in a manner conducive to achieving sustainable economic growth. At the current juncture, the balanced macroeconomic policy mix and the implementation of structural reforms, as using EU funds to foster the growth potential over the long term, are of the essence in preserving a stable macroeconomic framework and strengthening the capacity of the Romanian economy to withstand adverse developments.

The NBR closely monitors developments in the domestic and international environment and will continue to use the tools at its disposal to achieve the fundamental objective of price stability in the medium term.

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• to keep the monetary policy rate at 7.00 percent per annum;
• to leave unchanged the lending (Lombard) facility rate at 8.00 percent per annum and the deposit facility rate at 6.00 percent per annum;
• to keep the existing levels of minimum reserve requirement ratios on both leu- and foreign currency-denominated liabilities of credit institutions.

The annual inflation rate continued to decline in the first two months of 2023 Q3 overall, in line with forecasts, going down from 10.25 percent in June to 9.43 percent in August, amid the deceleration in the growth rate of food prices and the further drop in energy price dynamics, only partly counterbalanced, in terms of impact, by the hike in fuel and medicine prices.

At the same time, the annual adjusted CORE2 inflation rate saw a faster decrease in the first two months of Q3, falling slightly below the forecast to reach 12.0 percent in August from 13.5 percent in June. The developments are mainly ascribable to disinflationary base effects, declining commodities prices, primarily agri-food items, and the measure to cap the markups on essential food products. However, they also reflect a mitigation of the opposite influences coming from the gradual pass-through of higher corporate costs, especially wage costs, into consumer prices, given the resilience of demand in specific segments and the movements in import prices.

The annual inflation rate calculated based on the Harmonised Index of Consumer Prices (HICP – inflation indicator for the EU Member States) stood at 9.3 percent in August, similar to June 2023. Furthermore, the average annual CPI inflation rate and the average HICP inflation rate fell to 13.2 percent and 11.8 percent in August from 14.2 percent and 12.5 percent, respectively, in June, remaining below the levels prevailing in the region and the Baltic countries.

Economic growth sped up in 2023 Q2, to 0.9 percent from 0.5 percent in the previous three months (quarterly change), above forecasts, which makes it likely for excess aggregate demand to stop its contractionary trend over this period.

In annual terms, however, GDP growth decreased more than expected in Q2, reaching 1.1 percent from 2.4 percent in the first three months. The decline was driven this time round by household consumption, whereas gross fixed capital formation saw a slight re-acceleration in its double-digit annual growth, and net exports exerted a more considerable expansionary impact, given the widening of the positive differential between the dynamics of exports of goods and services, in terms of volume, and those of imports. Against this background, trade and current account deficits continued to narrow substantially in 2023 Q2 versus 2022 Q2.

The latest data and analyses point to more subdued economic growth in Q3 than previously forecasted and lower than in Q2, implying a relative recovery in the annual GDP growth rate under a base effect.

Thus, in the first month of Q3, retail trade and motor vehicles and motorcycle sales, as well as services to households, reported further declines in their annual dynamics, while industrial output witnessed a mildly more significant year-on-year contraction and the solid annual increase in the volume of construction works re-accelerated. Moreover, the annual nominal change in the exports of goods and services continued to widen its positive gap against that of imports, as the latter entered negative territory, thus causing the trade deficit to see a considerably faster annual decline in July. However, the current account deficit recorded a significantly slower year-on-year narrowing, mainly due to the worsening in the primary income balance.

Looking at the labour market, recent data show a slower monthly increase in the number of employees economy-wide in June-July and a relative stability of the ILO unemployment rate in June-August, alongside a slight deceleration in the annual dynamics of unit labour costs in the industry in the first month of Q3, but from the exceptionally high level reached in Q2 overall. At the same time, the surveys indicate that employment intentions over the very short horizon declined visibly in August-September but from levels close to historical highs, while the labour shortage reported by companies rose in Q3 due to developments in industry and services.

The central interbank money market rates halted their slow downward path in mid-August, while yields on government securities extended their upward course – in line with developments in advanced economies and the region – amid investor expectations on the Fed keeping policy rates higher for longer.

Against this background, the EUR/RON exchange rate climbed relatively abruptly in the first part of September, similarly to the exchange rates of currencies in the region, and then tended to stabilize at the new readings. At the same time, the domestic currency posted a notable depreciation versus the US dollar amid the latter’s strengthening trend on international financial markets.

The annual growth rate of credit to the private sector continued to slow down in the first two months of Q3, but more mildly, reaching 5.5 percent in August from 6.4 percent in June, as the leu-denominated component lost pace marginally and the relatively swift decrease in the dynamics of the foreign currency component was cushioned in terms of impact by the statistical effect of EUR/RON exchange rate movements. Therefore, the share of leu-denominated loans in credit to the private sector increased to 68.2 percent in August from 67.9 percent in June.

According to current assessments, the annual inflation rate will continue to fall until the end-2023 in line with the latest medium-term forecast (August 2023), primarily under the influence of base effects and the downward corrections of some commodity prices, as well as amid the rich crop domestically and the temporary cap on the mark-ups on essential food products.

Beyond year-end, significant uncertainties and risks surrounding the inflation outlook stem, however, from the configuration of the package of fiscal and budgetary measures envisaged to be implemented for furthering budget consolidation, as well as from the future fiscal and income policy stance conducive to inflationary effects in the short run, yet to more substantial underlying disinflationary pressures on the longer horizon.

At the same time, sizeable uncertainties and risks to the prospects for economic activity, implicitly the medium-term inflation developments, arise from the war in Ukraine and the below-expectations economic performance in Europe, whereas the absorption of EU funds, especially those under the Next Generation EU programme, is conditional on fulfilling strict milestones and targets. However, this is essential for carrying out the necessary structural reforms, energy transition, and counterbalancing, at least in part, the contractionary impact of supply-side shocks, compounded by tightening economic and financial conditions worldwide.

Also relevant are the ECB’s and the Fed’s prospective monetary policy conduct and the stance of central banks in the region.

In the meeting held today, 5 October 2023, based on the currently available data and assessments and the elevated uncertainty, the NBR Board decided to keep the monetary policy rate at 7.00 percent per annum. Moreover, it decided to leave the lending (Lombard) facility rate unchanged at 8.00 percent per annum and the deposit facility rate at 6.00 percent per annum. Furthermore, the NBR Board decided to keep the existing minimum reserve requirement ratios on credit institutions’ leu- and foreign currency-denominated liabilities.

The NBR Board decisions aim to bring the annual inflation rate back in line with the 2.5 percent ±1 percentage point flat target on a lasting basis, inter alia, by anchoring inflation expectations over the medium term in a manner conducive to achieving sustainable economic growth. At the current juncture, the balanced macroeconomic policy mix and the implementation of structural reforms, as using EU funds to foster the growth potential over the long term, are of the essence in preserving a stable macroeconomic framework and strengthening the capacity of the Romanian economy to withstand adverse developments.

The NBR closely monitors developments in the domestic and international environment and will continue to use the tools at its disposal to achieve the fundamental objective of price stability in the medium term.

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The new statistical data reconfirm the slowdown in economic growth in 2023 Q1 to 0.2 percent from 1.0 percent in the previous three months (quarterly change), which implies a relatively pronounced narrowing of excess aggregate demand over this period. At the same time, in 2023 Q1, the annual growth rate of GDP shrank significantly to 2.4 percent from 4.5 percent in 2022 Q4.

The Romanian currency posted a strengthening trend vis-à-vis the euro for most of July, among other things, under the influence of one-off or seasonal domestic factors, after softening mildly in the prior two months. Against the US dollar, the leu recorded a notable appreciation due to the significant weakening of the American currency on global financial markets in the first half of the period.

In the meeting held today, 7 August 2023, based on the currently available data and assessments and in light of the very elevated uncertainty, the NBR Board decided to keep the monetary policy rate at 7.00 percent per annum. Moreover, it decided to leave the lending (Lombard) facility rate unchanged at 8.00 percent per annum and the deposit facility rate at 6.00 percent per annum. Furthermore, the NBR Board decided to keep the existing minimum reserve requirement ratios on credit institutions’ leu- and foreign currency-denominated liabilities. The NBR Board decisions aim to bring the annual inflation rate back in line with the 2.5 percent ±1 percentage point flat target on a lasting basis, among other things, by anchoring inflation expectations over the medium term in a manner conducive to achieving sustainable economic growth. At the current juncture, the balanced macroeconomic policy mix and the implementation of structural reforms, also by using EU funds to foster the growth potential over the long term, are of the essence in preserving a stable macroeconomic framework and strengthening the capacity of the Romanian economy to withstand adverse developments.

NBR board meeting in August 7

The next meeting on monetary policy will be held on October 5.

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• To increase the monetary policy rate to 7.00 percent per annum from 6.75 percent per annum as of 11 January 2023;
• to raise the lending (Lombard) facility rate to 8.00 percent per annum from 7.75 percent per annum and the deposit facility rate to 6.00 percent per annum from 5.75 percent per annum as of 11 January 2023;
• to keep the existing levels of minimum reserve requirement ratios on both leu- and foreign currency-denominated liabilities of credit institutions.

The National Bank took these measures as it noted that the annual inflation rate reached 16.76 percent in November 2022, i.e. above the forecast, after falling to 15.32 percent in October from 15.88 percent in September. The increase was driven, during this period, too, especially by the hike in food prices, including VFE prices, and the more robust advance in the prices of non-food items and market services. However, their impact was markedly counterbalanced by the slower fuel price dynamics amid the downward trend in oil prices and the firewood price cap.

In the meeting held today, 10 January 2023, 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 7.00 percent per annum from 6.75 percent per annum as of 11 January 2023. Moreover, it decided to raise the lending (Lombard) facility rate to 8.00 percent per annum from 7.75 percent per annum and the deposit facility rate to 6.00 percent per annum from 5.75 percent. 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.

NBR meeting on January 10

According to the NBR meeting minute, the NBR Board decisions aim to anchor inflation expectations over the medium term, as well as to foster saving through higher bank rates, to bring the annual inflation rate back in line with the 2.5 percent ±1 percentage point flat target on a lasting basis, in a manner conducive to achieving sustainable economic growth. At the current juncture, the balanced macroeconomic policy mix and the implementation of structural reforms, among other things, by using EU funds to foster the growth potential over the long term, are of the essence in preserving a stable macroeconomic framework and strengthening the capacity of the Romanian economy to withstand adverse developments.

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The balance of payments current account had a deficit of EUR 12,298 million from January to June 2022 compared to a deficiency of EUR 7,203 million during the same time last year. According to the breakdown, the surplus on services climbed by EUR 487 million, the deficit on primary income increased by EUR 1,349 million, and the excess on secondary income decreased by EUR 44 million. The debt on trade in products increased by EUR 4,189 million.

From January to June 2021, non-residents made a total of EUR 4,379 million in direct investments in Romania (up from 3,605 million euros), of which equity (including the estimated net reinvestment of earnings) and intercompany lending recorded net values of EUR 3,115 and 1,264 million, respectively.

The entire amount of external debt increased by EUR 2,645 million between January and June 2022. The amount of long-term external debt at the end of June 2022 was EUR 93,691 million (68.3% of the total external debt), down 3.6% from the end of 202. The amount of short-term external debt was EUR 43,571 million (31.7% of the total external debt), up 16.3% from the end of 2021.

Compared to 16.4% in 2021, the long-term external debt servicing ratio was 15.5% from January to June 2022. The import cover for goods and services was 4.3 months at the end of June 2022 as opposed to 4.9 months at the end of 2021.

At the end of June 2022, the National Bank of Romania’s foreign exchange reserves were 76.4% of its short-term external debt by remaining maturity, down from 81.9% at the end of 2021.

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