Tuesday, November 5, 2013

Romania cuts rate 25 bps to 4.0%, fourth cut in a row

    Romania's central bank cut its policy rate by 25 basis points to 4.0 percent, its fourth cut in a row, in a move that was expected by many economists.
    In a brief statement, the National Bank of Romania (NBR) said it's board had also decided to pursue adequate liquidity management in the banking system and to maintain the existing level of minimum reserve requirements on both leu and foreign-currency denominated liabilities of credit institutions.
    A more detailed statement would be released later today at a press briefing, while the bank's new quarterly inflation report would be released on Nov. 7, the bank said.
    At its previous meeting in September, the NBR said a further decline in inflation had allowed the central bank to continue easing its policy and the trend had strengthened its expectation that inflation would fall bellow the bank's 2.5 percent target. The fall in inflation is expected to continue until the first half of next year.
    Romania's inflation rate fell to 1.88 percent in September from 3.67 percent in August. In August the central bank lowered its inflation forecast for 2013 to 3.1 percent from 3.2 percent but the bank also said the pass-through of its lower policy rates to commercial lending rates was moderate and slow.
    The NBR has now cut rates by 125 basis points this year following cuts of 75 basis points in 2012.
    Romania's Gross Domestic Product expanded by 0.5 percent in the second quarter from the first for annual growth of 1.5 percent, down from 2.2 percent in the first quarter.



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