Banca Nationala a Romaniei Cuts Rate 25bps to 5.25%

The Banca Nationala a Romaniei reduced its key monetary policy interest rate by another 25 basis points to 5.25% from 5.50%.  The Bank said: "The NBR restates that achieving both price and financial stability, in the context of fulfilling the commitments under the external financing arrangements with the EU, the IMF and other international financial institutions, is essential for ensuring lasting economic growth. Increased absorption of European funds along with a gradual revival of domestic demand will secure a sustainable economic recovery."

Previously the Bank also cut the rate 25 basis points in November and at its February and January meetings this year, prior to that its last move was a 25 basis point cut in May 2010.  Romania reported annual consumer price inflation of 2.6% in February, down from 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 5% against the US dollar over the past year, while the USDRON exchange rate last traded around 3.30.

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