Romania: Central Bank makes sixth consecutive cut to policy rate
February 5, 2014
At its 4 February meeting, the National Bank of Romania (NBR) decided to cut the monetary policy rate by 25 basis points from 3.75% to 3.50%. The decision, which was in line with market expectations, marked the Bank's sixth consecutive rate cut. In addition, the NBR decided to maintain the current levels of the minimum reserves requirement on both leu- and foreign currency-denominated liabilities of credit institutions.
The Bank stated that it has been able to gradually adjust the monetary policy stance due to the significant improvement in the path of the inflation rate. According to the NBR, growth in 2013 was driven mainly by an expansion in exports, which had a favorable impact on the current account, whereas consumption and investment are projected to recover gradually. In addition, the Bank added that the consecutive rate cuts to the monetary policy are, "confirming the consolidation of the transmission of the monetary policy signals."
FocusEconomics Consensus Forecast panelists expect the policy rate to be 3.67% in 2014. For 2015, the panel foresees the rate closing the year at 3.75%.
Author: Dirina Mançellari, Senior Economist