National Bank of Romania Eases Further as Expected

February 4, 2015

The monetary policy rate was reduced to 2.25%, a record low, from 2.50% after this month’s Board meeting.  This was the second such cut of 2015 and follows cumulative reductions of 125 basis points in 2014, 125 bps in 2013, 75 bps in 2011, 175 bps in 2010 and 225 bps in 2009.  The expected path of inflation was lowered to take into account the steep decline in energy costs, such that consumer prices are projected to post on-year increases of 2.1% at the end of this year and 2.4% at end-2016.  The Board released a statement noting that inflation fell to 0.8% in December from 1.3% in November.  The overnight rate corridor was also reduced at this time as a result of a 25-bp cut in the lending rate to 4.25% and an unchanged deposit rate of 0.25%.  Reserve requirements were not modified.

Copyright 2015, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.



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