Analysts: The NBR will not raise interest rates after August deflation

Publish date: Astazi, 15-09-2008
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Economic analysts have changed their mind and now estimate the NBR (National Bank of Romania) could preserve or even reduce the monetary policy rate by the end of this year, amid favourable inflation progression in August and the prospect of entering a disinflation trend after the yearly 9.04% peak reached in July.

Consumer prices declined by 0.09% in August, as services became cheaper, so annual inflation reached 8.02%. Previously, analysts had estimated that the central bank would ignore the disinflationary process and would continue the series of increases in the monetary policy rate, if it wants to meet the inflation target set for 2009.

The main arguments brought into discussion at the time were that the strong economic growth would be putting pressure on inflation and that the fiscal relaxation could potentially result in an increase in government spending before the parliamentary elections in November.

Analysts note that inflation data in August lessen the chances of a new interest rate increase in September, as the data is in line with expectations for a reduction in the consumer price index to under 7% by the end of the year.

Ziarul Financiar

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