The 0.25 hike of key interest rate shows inflationary pressures dipped, central bank head says

The 0.25 percentage points growth of the key interest rate to 9.75 percent is both a signal that the inflationary pressures lowered and a measure for cutting inflation, Central Bank of Romania (BNR) governor Mugur Isarescu said.

The official explained through this move BNR did not say the large inflation pressures disappeared yet they lowered. Isarescu believes the 0.25 percentage points increase is the "adequate dosage" for the time being.

"There is such a hunger for credits in this country that we would have to set interests to unknown limits. This is why we toughen the monetary policy and focus on lei savings," Isarescu said.

BNR on May 6 raised the monetary policy interest by 0.25 percentage points to 9.75 percent beating estimates, and maintained the current level of the mandatory minimum reserves.

The central bank’s managing board said continuing structural reforms, a restrictive monetary policy and a harsh fiscal approach must be kept in order for BNR’s measures to have effect.

NewsIn