Romania National Bank ups rate 0.5% to 8%

The National Bank of Romania-BNR increased the reference rate 0.5% to 8% on Monday, confirming analyst predictions. The BNR board believes that remaining pressure on domestic demand and the possibility of staying effects of offer-related shocks as well as risks about a possibly significant worsening of inflationary forecasts force a more restrictive monetary policy, a bank press release says.

According to central bank analysts, statistics show a continuing strong dynamic of domestic demand as a result of expanding investments as well as of an unsustainable-level consumption, while private sector loans growth is continuing to intensify, especially when it comes to loans in foreign currency.

Higher demand, fueled mainly by improved incomes and by the dynamics of non-governmental credit was more alert than offer performances.

The pace of salary growth remains above that of labor productivity, which, beside pressure on prices, has boosted risks of a lower foreign competitiveness.

The annual inflation rate stood at 6.67% in November last year, above the upper threshold of target variation as a result of higher food prices and tariffs for services which take Romanian leu (RON) exchange rates in consideration.