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Romania raises interest rates by 25 bps

Banking

Photo by Radu Bercan/Shutterstock.com

The National Bank of Romania raised its benchmark interest rate by 25 basis points (bps) to 1.5% at its October meeting, for the first time since 2018, according to centralbanknews.info.

The bank said it will maintain firm control over money market liquidity as short-term inflation will be significantly higher than previous forecasts under the impact of supply-side shocks, in particular larger hikes in energy prices.

The move aims to bring back and maintain the annual inflation rate, which is projected to climb 5.6% by year-end, in line with the 2.5% ±1 percentage point flat inflation target, in a manner conducive to achieving sustainable economic growth in the context of the fiscal consolidation process, while safeguarding financial stability.

Both the deposit and lending facility rates increased by 25 bps to 1% and 2%, respectively.

Furthermore, the central bank Board decided to maintain the existing levels of minimum reserve requirement ratios on both leu- and foreign currency-denominated liabilities of credit institutions.

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