The central bank also raised the interest rate for its deposit facility to 2% a year from 1.5% a year and the interest for its (Lombard) lending facility to 4% a year from 3.5% a year, applicable as of April 6, the central bank said in a statement.
It also decided to maintain the existing levels of minimum reserve requirement ratios on both leu- and foreign currency-denominated liabilities of credit institutions.
According to the bank’s statement, the annual inflation rate continued to rise gradually in the first two months of 2022, contrary to expectations, climbing to 8.35% in January and to 8.53% in February, from 8.19% in December 2021. The annual adjusted CORE2 inflation rate followed a faster-than-expected upward path in the first two months of Q1/2022, going up to 5.2% in January 2022 and to 5.9% in February 2022, from 4.7% in December 2021, mainly as a result of the step-up in broad-based increases in processed food prices.
Average annual CPI inflation rate and average annual inflation rate calculated based on the Harmonised Index of Consumer Prices (HICP – inflation indicator for EU Member States) went up to 6.0% and 5% respectively in February 2022, from 5% and 4.1% respectively in December 2021.
Recent developments in high-frequency indicators point to a slight, probably temporary, recovery in economic activity in Q1/2022, implying however the deceleration in annual GDP growth during this period as well, due to an ongoing base effect.
Looking at the financial market, the main interbank money market rates witnessed a faster pick-up in February and March 2022, reaching nine-year highs, following the new monetary policy rate hike, as well as amid the pronounced tightening of liquidity conditions and expectations on a further increase in the key rate.
A major source of uncertainties and risks also remains the absorption of EU funds – especially those under the Next Generation EU Program – that is conditional on fulfilling strict milestones and targets for implementing the approved projects.