Romania Monetary Policy


Central Bank unexpectedly cuts interest rates

At its 2 November meeting, the Central Bank cut the monetary policy rate by 25 basis points to a record low of 6.00%. The move, which surprised market analysts, who had expected rates to be left unchanged, seeks to buttress the economy in the midst of the protracted Euro area debt crisis. The Bank commented that the drop in annual headline inflation was mainly attributed to the fall in volatile food prices over June-September and the fading-out of most of the first-round effect of the VAT rate hike. Monetary authorities expect the downward trend in inflation to continue going forward, leaving room for further rate cuts if necessary. In fact, Central Bank Governor Mugur Isarescu recently declared that there is significant room for an easing cycle, but we don't want to disrupt the current balances.


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