National Bank of Romania Cuts Policy Rate By 50 Basis Points

June 30, 2009

In an easing move anticipated by many analysts, Romania’s central bank policy rate was reduced to 9.0% from 9.50%.  Such was the second cut of 50 basis points this month but only the third drop of the cycle.  The earlier cut in June was announced on the 5th, and a reduction of 25 basis points was made on February 4.  The peak level had previously been maintained from July 31st of last year until February 4th.  Reserve requirements are also being decreased to 15% from 18% on domestic currency balances and to 35% from 40% on foreign-currency denominated balances.  Romanian real GDP fell 6.2% last quarter and is expected to remain negative, while inflation is easing and, at 6.0%, well below the 9.0% new policy rate.  That leaves room for more rate reductions in coming months.

Copyright Larry Greenberg 2009.  All right’s reserved.  No secondary distribution without express permission.

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