Monetary Policy Unchanged in Romania

September 29, 2010

In another monetary policy announcement, the National Bank of Romania retained a key 6.25% policy rate.  That has been the level since a 25-basis point reduction on May 4 and cuts of 50 bps in each month of the first calendar quarter of 2010.  Monetary policy eased later in Romania than in many other countries.  At end-May 2009, only a single 25-bp cut announced in the prior February had been done.  Four cuts of 50 bps each were squeezed into the three months between early June 2009 and early September 2009, which along with this year’s moves total 400 basis points in all.

A five-percentage point leap in Romanian value added taxes effective in mid-2010 has not lifted inflation quite as much as feared.  Consumer prices rose 7.6% in the year to August versus 4.4% in the year to June, while core CPI advanced two percentage points to 4.5%.  A statement released today from officials speaks of efforts to balance the goals of price stability and financial stability.  Inflation is likely to settle back given slack in Romania’s economy.

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



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