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BNR: Increase, introduction of indirect taxes to raise downward trajectory of inflation in short term
The increase and introduction at the beginning of next year of some indirect taxes and fees in order to continue the budget consolidation, whose impact will be inflationary, although relatively modest and transitory, will raise in the short term the downward trajectory of the annual rate of inflation above that shown in the August forecast, according to the Minutes of the monetary policy meeting of the Board of Directors of the National Bank of Romania (BNR) on October 5, 2023.
''As for future developments, Board members showed that, according to the new assessments, the annual inflation rate would continue to fall until end-2023 in line with the latest medium-term forecast, published in the August Inflation Report, which had anticipated its decline to 7.5 percent in December 2023, to 4.4 percent in December 2024 and to 3.8 percent at the end of the projection horizon,'' read the BNR's Minutes.
According to the cited source, the disinflationary effects exerted in this way will be received mainly in the energy and food segments - both processed and with volatile prices -, further affecting the dynamics of core inflation, and, as a whole, they will be more intense in a closer perspective than previously forecast and counterbalanced only to a small extent by the relatively more pronounced increase in fuel price dynamics, against the backdrop of the higher-than-expected rise in oil prices, noted the Board members.
Board members were of the unanimous opinion that the reviewed context overall warranted keeping the monetary policy rate unchanged, with a view to bringing the annual inflation rate back in line with the 2.5 percent ą1 percentage point flat target on a lasting basis, inter alia by anchoring medium-term inflation expectations, in a manner conducive to achieving sustainable economic growth.
Moreover, Board members reiterated the importance of further closely monitoring domestic and global developments so as to enable the BNR to tailor its available instruments in order to achieve the overriding objective regarding medium-term price stability.
Under the circumstances, the BNR Board unanimously decided to keep the monetary policy rate at 7.00 percent. Furthermore, it decided to leave unchanged the lending (Lombard) facility rate at 8.00 percent and the deposit facility rate at 6.00 percent. In addition, the BNR Board unanimously decided to keep the existing levels of minimum reserve requirement ratios on both RON- and foreign currency-denominated liabilities of credit institutions.
AGERPRES
