In its meeting of June 29, 2011, the Board of the National Bank of Romania decided:
- to leave unchanged the monetary policy rate at 6.25 percent per annum;
- to ensure adequate management of liquidity in the banking system; and
- to maintain the existing levels of minimum reserve requirement ratios on both leu- and foreign currency-denominated liabilities of credit institutions.
The NBR will further vigilantly monitor domestic and global developments so as to ensure, via an adequate use of its available instruments, the achievement and maintenance of price stability in the medium term and the consolidation of financial stability.
In May, annual inflation rate rose marginally to 8.41 percent from 8.34 percent in the previous month against the background of a relative moderation in volatile and administered price growth. This evolution is in line with the latest medium-term inflation forecast presented by the NBR in the May 2011 Inflation Report, according to which disinflation will resume against the backdrop of the fading first-round effects of the VAT rate hike and the persistence of the negative output gap.
The most recent statistical data show a slower annual growth rate of industrial output and exports in April, along with the annual dynamics of leading indicators on domestic demand staying in negative territory. At the same time, however, there are incipient signs of a rebound in lending, associated also with a further decrease in bank lending and deposit rates, despite the still negative annual real growth of loans to the private sector, particularly recorded by credit in domestic currency.
The inflation outlook continues to feature significant risks. The developments in international commodity prices, the uncertainties related to the calendar and magnitude of administered price adjustments, the movements on global financial markets in the context of the evolution of the sovereign debt crisis, as well as the possible emergence of second-round effects from the supply-side shocks seen in the recent quarters remain a matter of concern. This calls for a further prudent monetary policy stance with a view to ensuring a solid anchoring of inflation expectations.
In this context, the NBR Board decided to leave unchanged the monetary policy rate at 6.25 percent per annum and to continue to pursue adequate management of liquidity in the banking system. Furthermore, the NBR Board decided to maintain the existing levels of minimum reserve requirement ratios on both leu- and foreign currency-denominated liabilities of credit institutions.
These decisions, along with the consistent implementation of commitments made by the Romanian authorities under the financing agreements with international institutions, will ensure the preservation of prospects of a sustainable resumption of disinflation and a robust recovery of the economy in the context of the nominal and real convergence process.
The NBR will further vigilantly monitor domestic and global developments so as to ensure, via an adequate use of its available instruments, the achievement and maintenance of price stability in the medium term and the consolidation of financial stability.
According to the calendar of NBR Board meetings dedicated to monetary policy issues, the next meeting is scheduled for August 3, 2011, when a new quarterly Inflation Report will be examined.