Thursday, August 4, 2011

Banca Nationala a Romaniei Holds Interest Rate at 6.25%

The Banca Nationala a Romaniei held its key monetary policy interest rate steady at 6.25%.  The Bank said it would "maintain the existing levels of minimum reserve requirement ratios on both leu-denominated and foreign currency-denominated liabilities of credit institutions".  The Bank also noted: "In the medium-term, upside risks to inflation remain significant, coming mainly from the timing and magnitude of administered price adjustments, the volatility of capital flows amid developments in the sovereign debt crisis in the European Union and the United States, as well as uncertainties regarding the evolution of global commodity prices."

Previously the Bank also held the interest rate unchanged at 6.25%, its last move was a 25 basis point cut in May 2010.  Romania reported annual consumer price inflation of 7.9% in June, compared to 8.4% in May and 8.3% in April 2011, and above the Bank's inflation target range of 3% plus or minus 1%.  The Bank previously noted it expects energy sector reforms and prices rises to keep inflation elevated this year.  The IMF is forecasting 2011 economic growth of 1.5%, and GDP expansion of 3.5-4% in 2011.


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