“Banks jumped the horse and raised ROBOR above the key rate. They overreacted. The tendency of banks and traders to look pessimistically at the future was obvious,” said BNR Governor Mugur Iserescu on the occasion of the presentation of the inflation report on Tuesday.

Inflation in June reached 15.1%, reports the National Institute of Statistics, which is significantly higher than the spring forecast of the BNR. On Friday, the National Bank raised the key rate by another 75 basis points, from 4.75% to 5.50%. This will be seen in an increase in ROBOR, the measure by which many of us pay bank rates. In a word, the rates for some loans will increase, which, in addition to inflation and rising energy bills, are causing more and more headaches.

What else did Mugur Iserescu say on Tuesday:

• Inflation is a global phenomenon, it is present not only in Romania. The lowest inflation in Europe exceeds 5%. Romania is in 7th place in terms of inflation
• In Romania, inflation was driven by energy, utilities, and food.

If the cap scheme didn’t intervene, we’d have 20% inflation

• In Hungary, inflation is lower because the capping scheme was also more generous

• Commodity prices have started to fall, a trend that is also being reported around the world. And as I said, when things start to get cheaper, we’ll reduce the rate hikes
• Labor market tightness has begun to rise, even if it is at a reasonable level compared to the pre-pandemic period.
• According to the IMF, 2022 means a global slowdown
• Population consumption developed favorably, which was expected. Gradually, the world discovered that inflation affects its purchasing power, so there was a softening of the suit. We believe that it will be even better visible in the second semester
• On the part of consumers, there is a growing preference for own brands and discounters
• The era of sharply negative real interest rates is over. In the history of mankind, such periods of financial repression occur once or twice a century. References to what interest rates were 4-5 years ago do not help us. That period is in no hurry to repeat itself.

• The normal interest rate in a period without inflation is 3-6%

Inflation will be limited this quarter. It is possible that we will see some increase in August, but gradually the trend is going down

• ROBOR is close to the monetary policy interest rate. It has been disconnected for more than 4-5 months. Banks jumped the horse and raised ROBOR above the key rate. They overreacted. The tendency of banks and traders to be pessimistic about the future was obvious.
• I personally agree that perhaps liquidity conditions have forced banks to abandon ROBOR. There are 10-12 million Romanians who have savings at drastically negative interest rates. Who really lose by keeping money on deposits
• Banks also looked at what was happening in the world – at discussions about hunger, about other imbalances.
• I send them to the banks so that they pay more attention to the signals of the National Bank
• The size of the trade deficit is closely related to the budget deficit. A major task of correction in the external sector is fiscal correction. Which, as you can see, is very difficult to do.
• The exchange rate is relatively stable. It is also about Romanians who come home to Saint Mary and sell currency. Non-residents have rediscovered Romania, and they also contribute to financing the budget deficit
• In Romania, there are not many presenters that the public can trust. That’s what we lacked: to get the course out of control!

• Inflation will be limited this quarter. It is possible that we will see some increase in August, but gradually the trend is going down.