A Seventh Rate Cut in Romania

February 3, 2010

The National Bank of Romania sliced its benchmark monetary policy interest rate by another 50 basis points to 7.0%.  This was the second reduction of 2010 following one on January 5.  During 2009, there were cuts of 25 basis points in February, two of 50 bps a piece in June, a fourth of 50 bps in August and a fifth also of 50 bps in September.  Amid political uncertainty, the central bank paused in 4Q09 to protect their currency, the leu.  Today’s statement does not mention the exchange rate, asserts that disinflationary forces continue despite the uptick of total inflation to 4.74% in December from 4.3% in October, talks about a consolidating current account deficit and persistent economic slack, and calls the present policy stance “prudent” in light of the uncertain global and domestic economic conditions.  Core inflation is only 2.8%.  Reserve requirements were not changed.

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



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