October 5 (SeeNews) - Romania's central bank said on Wednesday it will increase its monetary policy rate to 6.25% from 5.50% as of October 6.
The central bank, BNR, also decided to increase the deposit facility rate to 5.25% per year from 4.50%, as well as the lending facility rate to 7.25% from 6.50%, it said in a statement after a board meeting on monetary policy.
The existing ratios of minimum reserve requirements for both leu-and foreign currency-denominated liabilities of banks will remain unchanged.
The decision aims to anchor inflation expectations over the medium term, as well as to foster saving through higher bank rates, so as to bring back the annual inflation rate in line with the 2.5 percent ±1 percentage point flat target on a lasting basis, in a manner conducive to achieving sustainable economic growth, the bank said.
"At the current juncture, a balanced macroeconomic policy mix and the implementation of structural reforms inter alia by using EU funds to foster the growth potential over the long term are of the essence in preserving a stable macroeconomic framework and strengthening the capacity of the Romanian economy to withstand adverse developments," the BNR added.
Romania's consumer prices rose by 15.32% year-on-year in August, compared to an increase of 14.96% in July, the latest data from the statistics office showed.
According to current assessments, the annual inflation rate will probably stick to an upward path by the end of the year, under the impact of supply-side shocks, yet at a visibly slower pace, the BNR added.
The escalation of the war in Ukraine and the related increasingly harsh sanctions generate considerable uncertainties and risks to the outlook for economic activity, hence to medium-term inflation developments, through the possibly stronger effects exerted, via multiple channels, the bank said.
Major uncertainties and risks are also associated with the fiscal policy stance, given the requirement for further budget consolidation amid the excessive deficit procedure and the overall tightening trend of financing conditions, the BNR said.
The central bank's next monetary policy meeting will take place on November 8.
(1 euro=4.9419 lei)