Romania Central Bank Cuts Rates For Fifth Month To New Low

(RTTNews) - Romania's central bank on Wednesday lowered its key interest rate for the fifth consecutive session to a new low and economists expect more cuts as inflation is likely to remain subdued.

The Board of the National Bank of Romania slashed the monetary policy rate to 2.25 percent from 2.50 percent. The decision was in line with economists' expectations.

Since August last year, the central bank has lowered the rate steadily from 3.5 percent in four quarter-point reductions.

"With inflation set to remain subdued, we expect at least one more 25bp rate cut, to 2.0 percent," Capital Economics economist William Jackson said.

Headline inflation slowed to 0.83 percent in December from 1.26 percent in November. The bank aims to keep inflation between 1.5 percent and 3.5 percent.

The bank also decided to narrow the symmetrical corridor of interest rates on its standing facilities around the policy rate to ±2.00 percentage points from ±2.25 percentage points.

Hence, the deposit rate was left unchanged at 0.25 percent, while the lending facility or lombard rate was cut to 4.25 percent from 4.75 percent.