Romanian Monetary Policy Settings Left Unchanged

November 3, 2009

There was no further reduction in the 8.0% benchmark rate of the National Bank Romania, nor in marginal reserve requirements.  The leu’s vulnerability amid political uncertainty had led analysts not to expect further easing, even though the inflation of 4.94% in the year to September was slightly more than 300 basis points lower than the key central bank rate. A released statement from monetary officials called the present policy “prudent” and recommended a reduced inflation target of 3.0% through 2011 versus 3.5% this year.  Five interest rate reductions totaling 225 basis points were implemented earlier this year, the first of 25 bps in February and the others in May, June, August and September each amounting to 50 bps.  Officials also cut reserve requirements in October 2008 and March, June and August of this year.  A peak interest rate of 10.25% had been maintained for six months from August 2008 to early February of this year.

Copyright Larry Greenberg 2009.  All rights reserved.  No secondary distribution without express permission.

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