Continuation of weak European funds absorption and the decrease of the available real available income for population under the relative increase of inflationary influences represent a risk for the economic growth perspective, according to the minutes of the National Romanian Bank (BNR) board’s meeting for monetary policy published on the institution site.
“There were showed the uncertainties and risks on the economic growth perspective that come from the possibility of not fully offset the shift in social security contributions onto employees, but also the possible increase in the corrective fiscal measures during 2018 to ensure the compliance of 3 percent of the GDP reference value. It was also discussed the risk of continuation of weak European funds absorption during the financial framework 2014-2020, as well as the the decrease of the available real available income for population under the relative increase of direct and indirect inflationary influences. From the external environment perspective, it was shown the possible evolution under expectations of the inflation in Euro zone and other developed states, despite solid economic growths,” says the document.
The board members discussed about the possible implications of the new assessments on the short term economic growth, which show for the last quarter of 2017 and first quarter of 2018 a more alert annual growth than previously estimated, reconfirming at the same time the perspective of a deceleration trend, even slightly steeper than that anticipated in November 2017.
The net export is expected to decrease due to the increase in the negative balance of the commercial balance in October, contributing to the strong increase year-on-year of the deepening trend of the current account deficit.
As a result of the analysis, the board unanimously decided to increase the monetary policy rate to 2.00 percent from 1.75 percent, as well as to raise the deposit facility rate to 1.00 percent from 0.75 percent and the lending (Lombard) facility rate to 3.00 percent from 2.75 percent. In addition, the board unanimously decided to maintain the existing levels of minimum reserve requirement ratios on both RON- and foreign currency-denominated liabilities of credit institutions. In this context, board members repeatedly underlined the importance of a balanced macroeconomic policy mix,