Romanian Monetary Policy Left Unchanged This Month

August 2, 2012

Officials at the National Bank of Romania cut their policy interest rate four times by 25 basis points each between November 2011 and March 2012 but have made no further subsequent adjustment.  The rate level remains 5.25% after this week’s meeting, and it represents a cyclical low.  Five cuts totaling 225 bps were implemented in 2009 and four more totaling 175 bps followed in 2010 but none after May of that year until easing resumed in November 2011.  Romania has not escaped recession.  It is mild so far, but the economy is vulnerable to the euro area debt and banking crisis.  Furthermore, the leu has been very weak.  Data reported today showed a drop in PPI inflation to 5.8% in June from 6.7% in May and a 1.1% decline of retail sales in June.

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



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