NBR expects annual inflation rate to rise in January

The annual inflation rate will increase in the first month of this year and will then resume its gradual decline, on a lower trajectory than the one highlighted in the November 2023 medium-term forecast, according to the National Bank of Romania, Agerpres reports.

"The increase will be driven by the increase and introduction in January of some indirect taxes and levies in order to continue budgetary consolidation, while the subsequent decline in the inflation rate will be further driven by supply-side factors - primarily disinflationary base effects and downward corrections in agri-food commodity prices and crude oil prices - as well as the declining dynamics of import prices", the NBR statement said.

Significant uncertainties and risks are associated with the future conduct of fiscal and revenue policy, given the budget execution in 2023 and the coordinates of the approved budget programme for 2024, as well as the implications of the new pension legislation and the dynamics of public sector wages, which may require additional fiscal-budgetary corrective measures in the future, including in the context of the excessive deficit procedure and conditionalities attached to other agreements with the EC.

At its meeting on Friday, 12 January 2024, based on the assessments and data available at this point in time, as well as against the background of high uncertainties, the Governing Council of the NBR decided to maintain the monetary policy interest rate at 7.00% per annum.

The minutes of the deliberations on the adoption of the monetary policy decision at today's meeting will be published on the NBR's website on 25 January 2024 at 3 p.m. According to the announced calendar, the next monetary policy meeting of the NBR Governing Council will take place on 13 February 2024.

Translated by: Radu Matei