National Bank of Romania Implements Second Rate Cut of 2014

February 4, 2014

Romania’s monetary policy rate was reduced by 400 basis points in 2009-10, another combined 100 bps in 2011-12, 125 bps in the second half of 2013, and in each of the first two months of 2014 by 25 bps each.  The rate now becomes a record low 3.5% compared to 10.25% at the end of 2009.

But the statement accompanying today’s action expresses greater satisfaction the inflation will settle eventually at the central bank’s target of 2.5% and that bank lending and economic growth will prove ample.  Unlike the interest rate cut on January 8, this time officials did not also reduce reserve requirements.  Today’s easing had been anticipated, but the more complacent mood of the statement suggests a policy pause for the time being.

Copyright 2014, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.



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