Romania: Central Bank cuts policy rate for fifth consecutive meeting
January 8, 2014
At its 8 January meeting, the National Bank of Romania (NBR) decided to cut the monetary policy rate by 25 basis points from 4.00% to 3.75%. The decision met market expectations and marked the Bank's fifth consecutive rate cut. The NBR decided to cut the minimum reserve requirements ratio on leu-denominated liabilities from 15.0% to 12.0% and to reduce the minimum reserve ratio on foreign-currency denominated liabilities from 20.0% to 18.0%.
According to the Bank, the economic activity was, "bolstered by exports, as well as by the improvement in domestic demand given the increase in household final consumption." Regarding price developments, the Bank said that inflation is expected to reach historical low levels in the first half of 2014, "given the favorable base effect and the impact of the 2013 bumper crop."
FocusEconomics Consensus Forecast panelists expect the policy rate to be 3.67% in 2014, which is down 0.02 percentage points from last month's estimate. For 2015, the panel foresees the rate closing the year at 3.75%.
Author: Dirina Mançellari, Senior Economist