karhu Posted February 8, 2006 Share Posted February 8, 2006 The Romanian central bank (BNR) has hiked its key policy rate by 100bp to 8.5%. The consensus expectation (and ours) was that the BNR would leave interest rates unchanged. Furthermore, the BNR said that it would significantly drain excess liquidity from the money market – this also clearly constitutes a tightening of monetary policy. Today's hike demonstrates that the BNR is concerned about the strong inflationary pressures that continue to exist in the Romanian economy. The decision to hike interest rates will strengthen the BNR’s inflation- fighting credentials and should push down inflationary expectations. Despite the bold move, inflation will likely overshoot the BNR official target of 5% by the end of the year and so a further tightening of monetary conditions (through higher rates and/or a stronger currency) cannot be ruled out. http://www.fxstreet.com/nou/content/112800...ates&dia=822006 Quote Link to comment Share on other sites More sharing options...
?...! Posted February 8, 2006 Share Posted February 8, 2006 They are genuinely trying to close ground with the West through encouraging citizens to save some cash before the West stops spending and liquidity is evaporated via servicing debts. Smart move. Quote Link to comment Share on other sites More sharing options...
karhu Posted February 8, 2006 Author Share Posted February 8, 2006 They are genuinely trying to close ground with the West through encouraging citizens to save some cash before the West stops spending and liquidity is evaporated via servicing debts. Smart move. Just goes to show how wrong analysts can get it. Quote Link to comment Share on other sites More sharing options...
?...! Posted February 8, 2006 Share Posted February 8, 2006 Just goes to show how wrong analysts can get it. True, tough choices are tough to make and tough to forecast even if they do make sense in the long run. Look at the ignorance the US shows towards climate change for example. Embarrassing really. The BNR has showed some balls here by making a decision that may not be popular now but will see their nations economy better protected for a decade. Quote Link to comment Share on other sites More sharing options...
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