National Bank of Romania Implements Another 25-Basis Point Cut of Policy Interest Rate

July 1, 2013

Easing of the monetary policy rate in Romania had been paused since March 2012.  Today’s cut to a record low brings the cumulative drop since 2008 to 525 basis points.  400 bps of that drop occurred in 2009-10, and four 25-bp moves were squeezed into a 3-month span between November 2011 and March 2012.

Inflation of 5.3% remains above the 1.5 – 3.5% target band, but in-target observations are projected by autumn.  Growth revived in the first quart of 2013, but a negative output gap augers well for future inflation.  A statement from the monetary authorities declares, “this outlook enables the gradual easing of the monetary policy stance, while effectively anchoring inflation expectations and duly monitoring domestic and global developments.”  The next policy meeting is set for August 5.

Copyright 2013, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.



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