At face value, there are a few ways the National Bank of Romania (NBR) could justify another 25bp rate cut at its October meeting. One of them is the available policy space. August’s inflation decelerated to 5.1%, while the deposit facility (the de facto policy rate in an excess liquidity environment), sits at 5.5%. What’s more, based on our most recent assessments, this positive real rate is very likely to increase once the September inflation print is released, which would intensify the policy restrictiveness.
The other reason is the weaker-than-expected economic growth over the…