Central Bank of Romania Eases 50 Basis Points, Too

May 6, 2009

Romania’s monetary policy rate was cut today to 9.5% from 10.%.  This is the second reduction of 2009 following a 25-bp cut on February 4th.  Analysts leaned toward expected another 25-bp cut today.  In 2008 when inflation rose and the Romanian lei like many Eastern European currencies depreciated sharply, Romania’s central bank implemented six hikes between January and August, lifting the benchmark to 10.25% from 7%.  Against that aggressive tightening, officials have been cautious in reversing policy gears amid intense global financial problems and a deep recession that has spilled into 2009.  The benchmark rate is higher than on-year CPI inflation of 6.7%.  Romanian reserve requirements were not changed today.

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