National Bank of Romania Drops Rate 25bps to 5.75%

The Banca Nationala a Romaniei reduced its key monetary policy interest rate by 25 basis points to 5.75% from 6.00%.  The Bank said: "The recovery of the Romanian economy has continued – underpinned by favourable dynamics of exports, as well as of industrial and farming output – whereas the growing uncertainties regarding global and European growth amid a worsened global risk appetite and heightened sovereign debt crisis in the euro zone are hindering the short-term outlook for the overall economic activity in Romania."

Previously the Bank also cut the rate 25 basis points in November, prior to that its last move was a 25 basis point cut in May 2010.  Romania reported annual consumer price inflation of 3.44% in November, compared to previous readings of 3.45% in September, 4.25% in August, 4.85% in July, 7.9% in June, 8.4% in May and 8.3% in April 2011, and now within the Bank's inflation target range of 3% plus or minus 1%.

The Romanian economy expanded 1.8% in Q3 2011 (0.2% in Q2), placing annual growth at 2.6% (0.3% in Q2).  Romania's currency, the Romanian Leu (RON), has weakened about 3% against the US dollar in 2011, while the USDRON exchange rate last traded around 3.40.  The Banca Nationala a Romaniei next meets on the 2nd of February 2012.

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