The central bank may nevertheless provide some insight into its exchange-rate policy after the leu lost around 2% since July amid a more flexible managed-floating exchange-rate regime and a decline in foreign-exchange reserves.<\/p>\n
Comments by central bank spokesmen following the sharp depreciation episode in early October suggested a change in the BNR\u2019s reaction function, with greater weight being given to interest-rate stability than to exchange-rate stability, an Erste Group note on the monetary policy decision said.<\/p>\n
The central bank has broadly reiterated that there has been no change in the managed-floating FX regime, but that FX management has become less tight. This echoes comments by BNR governor Mugur Is\u0103rescu in August that the central bank has room for greater exchange-rate flexibility. The outlook for EUR\/RON, however, remains conditional on fiscal consolidation and political stability.<\/p>\n
On the other hand, despite expected rate moves by major central banks, rate hikes in Romania appear unlikely given an economy operating with a deeply negative output gap.<\/p>\n
The BNR\u2019s press release is unlikely to provide many additional insights into its thinking, except for potentially signalling an upward revision to the short-term inflation profile in the next Inflation Report, due after the November 12 monetary policy meeting, Erste Research said in a note.<\/p>\n
Erste Group currently forecasts inflation at 6.4% y\/y at the end of this year, although the recent leu depreciation and changes in commodity prices are tilting the risk balance upwards. This is likely to result in a forecast revision to around 6.9% y\/y, unless September CPI data bring significant surprises compared with its forecast of 6.6% y\/y, the group said.<\/p>\n
A disinflationary trajectory next year, provided the fiscal stance remains firm \u2013 itself contingent on political stability \u2013 should allow the BNR to start easing monetary policy. Is\u0103rescu said at the August press conference that the central bank would start considering rate cuts once inflation falls below the key interest rate, which could happen at the beginning of next year.<\/p>","protected":false},"excerpt":{"rendered":"
The central bank may nevertheless provide some insight into its exchange-rate policy after the leu lost around 2% since July amid a more flexible managed-floating exchange-rate regime and a decline in foreign-exchange reserves. Comments by central bank spokesmen following the sharp depreciation episode in early October suggested a change in the BNR\u2019s reaction function, with […]<\/p>\n","protected":false},"author":0,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-12361","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/ofero.news\/index.php?rest_route=\/wp\/v2\/posts\/12361","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/ofero.news\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/ofero.news\/index.php?rest_route=\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/ofero.news\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=12361"}],"version-history":[{"count":0,"href":"https:\/\/ofero.news\/index.php?rest_route=\/wp\/v2\/posts\/12361\/revisions"}],"wp:attachment":[{"href":"https:\/\/ofero.news\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=12361"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ofero.news\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=12361"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ofero.news\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=12361"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}