No Change in National Bank of Romania’s 6.25% Monetary Policy Rate

January 5, 2011

Romania’s monetary policy is hand-cuffed by the conflicting problems of disappointingly low economic growth, much higher-than-targeted CPI inflation, and deficient private-sector credit growth.  Central bank officials implemented nine rate reductions from February 2009 to May 2010 totaling 400 basis points but are now maintaining a “prudent” wait-and-see stance.  In a new released statement, monetary officials left their key interest rate at 6.25% for the fourth meeting in a row, left reserve requirements unchanged, and pledged to keep ample liquidity in the banking sector.  GDP is expected to hover between 1% and 2% this year — low for eastern Europe.  CPI inflation short up in the wake of a value added tax hike six months ago and at 7.7% is more than twice as high as the mid-point of the central bank’s medium-term target of 2.5-4.5%.  The next policy meeting is scheduled for February 3rd.

Copyright Larry Greenberg 2011.  All rights reserved.  No secondary distribution without express permission.



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