National Bank of Romania Sanctions a Further Interest Rate Cut of 25 Basis Points

November 5, 2013

With today’s cut to 4.0%, Romania’s monetary policy interest rate has dropped in four steps by 125 basis points since midyear.  From a peak of 10.25%, previous reductions of 400 bps were implemented in 2009-10 and 100 bps between November 2011 and March 2012.  Analysts anticipated today’s development.

In a statement released today, officials at the central bank detail various elements of a further greater-than-anticipated disinflation.  Consumer prices rose just 1.88% in the year to September, half as much as the 12-month increase to August, and the economy’s output gap will remain negative for now.

The improvement in inflation developments and the related outlook has enabled the central bank to gradually adjust the monetary policy stance over the past few months, under conditions compatible with effectively anchoring inflation expectations and in parallel with closely monitoring domestic and external developments.

The NBR Board has also decided to continue to pursue adequate liquidity management in the banking system and to leave unchanged the existing levels of minimum reserve requirement ratios on both leu- and foreign currency-denominated liabilities of credit institutions.

Copyright 2013, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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