Bank analysts expect another interest rate cut in Romania on August 5

By bne IntelliNews August 2, 2013

Romania’s central bank is anticipated cut the monetary policy interest rate by another 25bps to 4.75%, according to an opinion poll of the bank analysts’ association quoted by news agency Agerpres.

The central bank cut the policy interest rate by 25bps to 5% on July 1 after having maintained it at 5.25% for more than a year. Out of the 19 analysts polled, 14 believe that the central bank would pursue a second interest rate cut this month.

The central bank would further cut the policy interest rate to 4.5% by the year-end but would slow down pace of the interest rate reduction so that the rate would touch 4.25% at the end of 2014, according to the poll's baseline scenario. Analysts’ expectations for the monetary policy rate at the end of 2014 range between 3.5% and 4.5%.

In regards to the required reserve ratios, analysts believe that the ratio for domestic liabilities could be reduced from 15% currently to 12% -- but rather next year than this year, while the ratio for forex liabilities would remain at 20% at least by the end of 2014.

Romania’s central bank targets an end-year headline inflation of 2.5% +/-1pps and the inflation targeting band will remain at this level for the coming years. Under the most recent projection, actual inflation [5.37% at the end of June] would enter the inflation targeting band before the end of 2013.


Related Articles

Romania's Transgaz to open branch in Moldova to speed up pipeline construction

Romanian natural gas transport company Transgaz will soon open an office in Chisinau to speed up the construction of Ungheni-Chisinau pipeline that will bring Romanian gas to Moldova’s main ... more

Cummins reportedly to relocate production from UK to Romania after Brexit

Global engine and generators manufacturer Cummins plans to relocate production from the UK to Craiova, in southwest Romania, after Brexit, Craiova mayor ... more

Nato boosts Black Sea presence with new Romanian military force

Nato launched a new multinational force in Craiova, southern Romania, on October 9, as part of its Forward presence in the southeastern alliance states.  The move is aimed at countering ... more