Romania Claims First Central Bank Change of 2010

January 5, 2010

The National Bank of Romania’s monetary policy rate is being reduced 50 basis points to 7.5%.  Five cuts were implemented during 2009 but none since a 50-bp move on September 29.  Earlier, the rate had been cut by 25 basis points in early February, twice by 50 bps each in June, and a fourth time by 50 bps on August 4.  The prior central bank peak maintained in 2H08 and January 2009 had been 10.25%.  Falling inflation permitted the easing of monetary policy, but concern that excessive rate cuts might weigh on the exchange rate had led officials to pause last quarter.  Most analyst were expecting the central bank to leave its key interest rate unchanged today at 8.0% especially in light of an uptick in on-year CPI inflation to 4.7% in November from 4.3% in October.  The central bank had targeted end-2009 inflation at 4.5%.  The Romanian currency, the leu, did not weaken on the initial news of today’s easing, however.

Copyright Larry Greenberg 2010.  All rights reserved.  No secondary distribution without express permission.


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