January 10 (SeeNews) - Romania's central bank said on Monday it will increase its monetary policy rate to 2.00% from 1.75% as of January 11 - the third rate hike since May 2018.
The central bank, BNR, also decided to keep the deposit facility rate at 1% per year and increase the lending facility rate to 3.00% from 2.50%, it said in a statement after a board meeting on monetary policy.
BNR also decided to maintain the existing ratios of minimum reserve requirements for both leu- and foreign currency-denominated liabilities of banks.
According to current assessments, the annual inflation rate is likely to rise gradually over the months ahead, under the impact of supply-side shocks, exceeding the values shown over this time horizon by the medium-term forecast last November, the central bank said.
Behind the worsening of the short-term inflation outlook stand the expected higher increases in electricity and natural gas prices – even amid the implementation of measures to compensate and cap such hikes – as well as in processed food prices, mainly due to the advance in energy and agri-food commodity prices, BNR explained.
The BNR also noted that significant uncertainties still linger over the effects of temporary measures to compensate and cap price hikes for electricity and natural gas for households, as well as over how they will be assessed and included in the CPI calculation. Moreover, uncertainties and risks continue to stem from developments in commodity prices, particularly of energy and agri-food, as well as from bottlenecks in global production and supply chains.
At the same time, the evolution of the pandemic and the ensuing containment measures remains a major source of uncertainties and risks to the forecast, over the short term at least, amid the nationwide expansion trend of the pandemic wave entailed by the more contagious Omicron variant, as well as given the insufficient progress of vaccination domestically, BNR said.
The next monetary policy meeting of the central bank's board is scheduled to take place on February 9.
(1 euro=4.9439 lei)