Lucian Anghel, Deputy CEO, Libra Bank: "I think that the BNR has proven that it is independent, by not reducing the interest rate"

The fact that we are in an election year does not influence the monetary policy decisions of the National Bank of Romania (BNR), which has proven to be independent, believes Lucian Anghel, Deputy CEO at Libra Internet Bank.

The economist stated, during a meeting with journalists: "If we had seen monetary policy interest rate cuts, someone malicious could have said that the national bank is trying to help the government, because the budget deficit needs to be financed, and the costs are very high. Or, a monetary policy interest rate cut helps or reduces the government's funding costs. Like a breath of oxygen that the national bank would have indirectly offered to the government".

Lucian Anghel added: "On the contrary, by not reducing the interest rate, I think the central bank has proven that it is independent. It was the same talk with the Federal Reserve - that it would cut interest rates to help one of the candidates. She hasn't done this, she's stuck to her standard and is trying to be sure (not rush) about the first rate cut, even though others have made such moves. In our region, some central banks have reduced interest rates. In Poland, probably also due to political pressure, we saw a major reduction in interest rates. I think that the Romanian central bank is an example for other central banks, how in a year with a lot of elections it manages to maintain its independence. It is to be appreciated and it is an institution that ensured an important part of the stability of the Romanian economy".

Starting from January last year, the monetary policy interest applied by the BNR is 7%. Libra economists are tipped for the bank to make its first rate cut, of 0.25%, at the July meeting. For the whole year, the forecast is three interest cuts, which will reach 6.25%.

Lucian Anghel also stated that, in his opinion, in the long term it is much more difficult for Romania to correct the trade deficit and the current account deficit, than the budget deficit. "But we also need to focus on the trade deficit. Romania should propose a medium and long term strategy; to try to reduce the trade deficit and the current account deficit. In leadership lessons, in the general school, we should, and this does not cost us, present to the children why it is good to buy, for example, a cozonac made in Romania, compared to one produced in another country. This does not require investments, but is related to economic education, financial education", said Lucian Anghel.

According to Libra Bank's estimates, a one billion euro equivalent reduction in the trade deficit would have a positive influence on GDP by an average of 0.6 - 0.7 percentage points, provided the domestic supply improves.

Libra Bank economists forecast that our country will have a real GDP growth of 2.6% this year, based on both consumption and investment, especially in infrastructure. The budget deficit is estimated at 6.9% this year, compared to 6.6% last year, while the current account deficit is forecast at 7%, down from 7.2% in 2023. Public debt will reaches 50.9% of GDP, according to Libra.

Economists expect the leu to depreciate slightly against the euro, to 5.01 lei, compared to 4.96 lei last year, according to yesterday's presentation by the bank's team.