Romania's central bank cut its policy rate by another 25 basis points to 2.25 percent against the backdrop of heightened uncertainty surrounding geopolitical tensions, the situation in Greece and the growing divergence between the monetary policy of major central banks.
The National Bank of Romania (NBR), which has now cut its rate by 300 basis points since embarking on an easing cycle in July 2013, also narrowed the rate corridor around its standing facilities to plus/minus 2.0 percent from plus/minus 2.25 percent, resulting in the Lombard lending rate being cut to 4.25 percent from 4.75 percent while the deposit rate remains at 0.25 percent.
Noting the downward shift in the inflation path, the central bank also lowered its forecast for inflation to 2.1 percent by the end of 2015 from November's forecast of 2.2 percent, and to reach 2.4 percent by end-2016.
It attributed falling inflation to the fall in oil prices, a persistent negative output gap, lower inflation expectations and the subdued inflation and weak economy in Europe.
Romania's consumer price inflation eased to 0.8 percent in December from 1.3 percent in November, below the bank's target of 2.5 percent, plus/minus 1 percentage point.
Meanwhile, Romania's economy remained on an upward course in the fourth quarter of 2014, with industrial output, retail trade and construction above the third quarter, the bank said. Third quarter Gross Domestic Product expanded by 1.8 percent from the second for annual growth of 3.2 percent, up from 1.4 percent in the previous quarter.
The National Bank of Romania issued the following statement: