National Bank of Romania Cuts Key Rate and Reserve Requirement
August 4, 2009
Romania’s central bank implemented its fourth monetary policy rate reduction, an as-expected 50-basis point cut to 8.5%. Prior reductions amounted to 25 bps on February 4, and 50 bps each on June 5 and June 30. A peak of 10.25% had been maintained since end-July of 2008 until early February. Consumer price inflation of 5.9% remains over two percentage points below the benchmark interest rate but over a percentage point above the inflation target ceiling of 4.5%. Romania remains in a severe recession that is expected to see real GDP drop over 6% this year and more than 1.5% in 2010. As on June 30, today’s rate cut was complemented with a reduction of reserve requirements on foreign currency deposits to 30% from 35%.
Copyright Larry Greenberg 2009. All rights reserved. No secondary distribution without express permission.
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