National Bank of Romania

September 30, 2014

Analysts were not surprised to learn of another 25-basis point cut in Romania’s monetary policy rate to a further record low of 3.0%, effective October 1.  This was the fourth reduction of 2014, all by 25 basis points.  The rate earlier had been cut from a pre-Great Recession peak of 10.25% to 8.0% by end-2009, 6.25% by end-2010, 6.0% by end-2011, 5.25% by end-2012, and 4.0% by the end of 2013.  Nonetheless, today’s statement explaining the latest easing observes sub-1% CPI inflation compared to a target range of 1.5-3.5% and speaks of a slowdown in domestic growth.  The central bank Board also agreed to cut reserve requirements.  The statement reaffirms the “overriding objectives of medium-term price stability and the preservation of financial stability.”

Copyright 2014, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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