In the monetary policy meeting of July 6, when it raised the refinancing rate by 1pp above market expectations in response to inflation well above expectations, the members of the National Bank of Romania (BNR) board warned that monetary policy must be carefully strengthened so as not to generate a significant slowdown in economic growth.

From that perspective, they underlined the importance of the dosage of measures and of the calibration of the monetary policy conduct at the current juncture to avoid, as much as possible, a significant slowdown of economic growth, also given the major contractionary effects generated by the sizeable supply-side shocks, the energy crisis in particular, but also the requirement for fiscal consolidation progress.

The BNR, just like economists, is surprised by the economic growth in the first quarter of this year (dynamics of 5.2% quarterly and 6.4% annually) and expects the surplus of demand to reach "visible" above the level anticipated, but at the same time to be relatively moderate, according to the minutes of the monetary policy meeting of July 6, published on July 18.

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andrei@romania-insider.com