Romania: Central Bank cuts policy rate for first time in 16 months
July 1, 2013
At its 1 July meeting, the National Bank of Romania (NBR) cut the monetary policy rate by 25 basis points to 5.00%, after having kept the rate unchanged for 16 consecutive months. The move was widely anticipated by market analysts, as monetary authorities attempt to boost sluggish economic growth through lower interest rates. The Bank, however, left its minimum reserve requirements on both leu and foreign-exchange deposits unchanged.
Regarding inflation developments, the Bank noted that inflation was in line with its projections. According to the NBR annual inflation rate is expected to decelerate faster than the previous months and re-enter the 2.5% +/- 1 percentage points inflation target corridor by the end of the year. The Bank considers that the current economic situation allows a gradual easing of the monetary policy while anchoring inflation expectations. The next monetary policy meeting is scheduled for 5 August.
FocusEconomics Consensus Forecast panellists expect the Central Bank to cut interest rates this year, resulting in a year-end rate of 5.20%. For 2014 the panel foresees the rate closing the year at 5.21%.