October 31 (SeeNews) - Romania’s central bank, BNR, is likely to keep its key interest rate at 1.75% at its last monetary policy meeting for this year, having no reasons to act ahead of major events such as the general elections which have the potential to significantly alter the policy outlook, analysts said on Monday.
ING Bank analysts said that they do not expect any change in the monetary policy stance after the BNR meeting on November 4.
However, at the first meeting in 2017, on January 6, the analysys expect to see some uncertainty related to fiscal initiatives ahead of elections with a significant impact on the inflation forecast disappearing, or becoming less probable.
Analysts gave the example of the VAT cut for some food items from 24% to 9% from June 2015. Romania also cut the VAT from 24% to 20% as of January 1, 2016.
"Provided no major surprises, we see BNR opening room in January for narrowing the standing facilities corridor at the February meeting," the analysts concluded.
Romania will hold general elections on December 11.
UniCredit Bank analysts also said they expect BNR to keep the monetary policy rate at 1.75% and maintain a dovish tone on higher
uncertainty and risks generated by the ongoing debate on legislative initiatives affecting the financial sector.
"Moreover, the upcoming parliamentary elections and the expectation of monetary policy changes by major central banks by year end argue in favor of no changes at this stage," UniCredit said in a weekly report on Monday.
Banca Transilvania analysts also expect the BNR to keep unchanged the key interest rate, as well as its other monetary policy instruments.
BNR's monetary policy rate has stayed at 1.75% since May 2015 following a cut from 2.0%.
(1 euro = 4.5057 Romanian lei)