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.


Comments are closed.