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September 27 (SeeNews) - Romania’s central bank is likely to maintain its key rate at 7% at its October 5 board meeting, Austria’s Erste banking group said on Wednesday.
The key rate is likely to remain unchanged until the central bank’s meeting in May 2024, assuming no meaningful deviations from the bank’s latest inflation forecast take place, Erste analysts said in a short note on Romania.
This expectation is set against the backdrop of a tight labour market and the prospect of strong real age growth over the next couple of years, according to Erste.
The central bank sees core inflation at 7% by the end of the second quarter of 2024, which could delay its first key rate cut until the third quarter of 2024, as real wages are seen to continue to grow further. Projected wage hikes are supported by the private sector salary indexation to past inflation in early 2023 as well as expected minimum wage and public sector pay increases in 2024.
Romania’s consumer prices rose by 9.4% on the year in August, latest from the statistics office indicated.
On August 7, Romania's central bank decided to keep its monetary policy rate unchanged at 7% for a fifth time since January in an attempt to bring the annual inflation rate back in line with the 2.5 percent plus/minus1 percentage point flat target on a lasting basis.
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