National Bank of Romania

May 2, 2012

Monetary authorities opted for prudence in the face of domestic policy uncertainty, a more vulnerable leu exchange rate, and general European debt uncertainties.  They elected to keep the benchmark interest rate steady at 5.25% rather than implement a fifth straight cut of 25 basis points even though CPI inflation eased further in the first quarter.  Headline inflation fell to 2.4% in March from 3.1% at end-2011, and core inflation dropped to 2.0% from 2.4%.  A statement from the central bank in Romania projects in-target inflation over its entire forecast horizon.  The monetary policy rate was reduced earlier by 225 basis points in 2009 and by an additional 175 bps to 5.25% in 2010.  After pausing policy through October 2011, four straight rate cuts, each by 25 basis points, were administered in November of last year and January, February, and March of 2012.  The next policy meeting is scheduled for June 27.

Copyright 2012, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.



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