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November 9, 2018 www.intellinews.com I Page 27
bne:Credit
Capital Economics warns of growing overheating risk in Romania
Polish rate setters hold but strike slightly hawkish tone
Overheating risks are building in the Romanian economy, Capital Economics analysts warned on November 6 after the Romanian central bank decided to keep its policy rate at 2.5%. The National Bank of Romania (BNR) was widely expected to maintain the policy rate at the November 6 meeting. However, Capital analysts said the decision, “adds to our concerns that overheating risks are being overlooked”.
They cited fast-rising wages, and the widening of the current account deficit to a five-year high — and one of the highest levels in any emerging market — of 4.0% of GDP. “We think that further interest rate hikes are needed to cool the economy,” Capital analysts stressed in the November 6 note.
Poland’s Monetary Policy Council (MPC) left interest rates at their current record low of 1.5% on November 7, but the slightly more hawkish tone of the presser and new inflation and growth projec- tions might hint the end of the current cycle is closer than previ- ously thought.
Fast economic growth accompanied by only moderate inflation provide no premises for a change in monetary policy at the moment, the MPC said in the statement following the decision.
However, new projections of inflation and economic growth presented by the rate-setting body suggest a pick up in price growth and moderation of GDP expansion are looming.
CPI growth is now expected at 1.7%-1.9% in 2018, compared to the previous outlook of 1.5%-2.1%.
Belarus intends to borrow $500mn from the international capital markets in 2019 to maintain its gold and foreign exchange reserves as well as refinance existing debt, the Belarusian Finance Minister Maksim Yermolovich said, reports BelTA.
“As part of next year's state budget the finance ministry intends to raise an extra $500mn to beef up the gold and foreign exchange reserves. The finance ministry is technically ready to raise the funds but the decision will depend on the state of foreign markets, on whether the government will be comfortable with the borrowing terms,” said Yermolovich. “We don't need money that much in 2019. It will be a convenient time for reaching the markets we have not been present on yet,” he added.
Belarus intends to borrow $500mn from the international capital markets in 2019