Dascalu (BCR): We expect BNR to increase interest rate to 3.5% in second part of 2022

The National Bank of Romania (BNR) could increase the monetary policy interest rate to 3.5% in the second half of the ongoing year, said Ciprian Dascalu, BCR chief economist.   “Since we foresee an average inflation of 9.6% this year and an average salary increase of 7.2% we have already prognosticated a negative salary increase, which could normally place a significant pressure on consumption and we see a significant slowing down of economic growth to 3.2% from 5.6% this year. We expect BNR to increase interest rates to 3.5% in the second part of the year, when we see the cycle top. However, mention should be made that in conditions of a strict control of liquidity, the relevant rate for credit cost will remain the interest rate to the credit facility known as Lombard, which will be 4.5%”, said Ciprian Dascalu at the event “Romania whereto? Inflation and macroeconomic prognoses for 2022”, organized by Oxygen Events.   He pointed out that probably, demand excess will be revised downward “according to the latest data which surprised GDP negatively and after we see inflation biting from the available income.”   In his turn, Florian Libocor, the chief economist of BRD considers that “playing with the key interest rate should be done more mildly.”   “Such volatility or fluctuations of the key interest are not beneficial in point of signal we send to the economy. Investment plans are made for at least one year, if not for three or five years, when we talk about major investments. From my point of view I think it would be wise to approach things more prudently. The Central European Bank, as any central bank, can be mistaken as it happened twice, so far. I reiterate what I already said: if in December you released a calm message, having at your disposal data from all structure, the most ample data, and then in January you say we have a problem I wonder: What do you count on?” Florian Libocor said.   On the other hand, Florin Danescu, Executive President of the Romanian Banks Association (ARB) said that “politics is no longer connected to economy so much.” “We are talking today only about energy, energy crisis, inflation generated mainly from this energy crisis phenomenon, but I think there will also be reorganizations of work finances from investment perspective, in order to counteract the effect of energy and tectonic movements around our country. That is very important. How will investments be reorganized from the perspective of energy investments? That brings to the fore that politics is no longer connected to economy work wide and that is one of the most important factors,”Danescu said.   The BNR Administration Board decided on February 9 to increase the monetary policy interest rate to 2.5% per year, from 2% per year.