BNR:Romania could cut key interest rate early next year as inflation eases

  Romania could begin lowering its monetary policy interest rate early next year as inflation falls below the benchmark rate, National Bank of Romania (BNR) Governor Mugur Isarescu said on Thursday."I cannot tell you at this point [when the monetary policy rate could be cut - editor's note], because there are many uncertainties. But let me repeat what I have said before. As inflation declines, and of course once it falls below the monetary policy rate, we can expect such a move. As I see things now, probably by the beginning of next year," Isarescu said when asked whether a policy rate cut could take place this year.Commenting on the impact of political instability on the exchange rate, the BNR governor described the situation as "quite sensitive" but stressed that the central bank's interventions on the foreign exchange market had been significantly smaller than last year."The situation is quite sensitive. But it is certainly not like it was, for example, in April last year. I have read assessments of the National Bank's interventions on the foreign exchange market. Those analyses referred to EUR 3.3 billion in interventions, but they did not specify the period over which they were made. What I can tell you is that our interventions this year have been much, much smaller than last year. There have been pressures, but we have not had to intervene extensively. We have also allowed the exchange rate to become more flexible, and we continue to do so. It is broadly where it should be, because that is the essence of a floating exchange rate - it reflects the balance between supply and demand. It does not necessarily have to fluctuate significantly; it should remain around its equilibrium level. So far, the market has been helping us," Isarescu explained.On August 10, the National Bank of Romania's Board of Directors decided to keep the monetary policy interest rate unchanged at 6.50% per annum, where it has remained since August 2024. (Photo:https://www.bnr.ro/)