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, Bulgaria seek China’s support for third Danube bridge

The third bridge over Danube between Romania and Bulgaria will be part of a package that four Balkan countries — Romania, Bulgaria, Serbia and Greece — will offer China for funding, the prime ... more

Slovakia battling Romania for Chinese electric carmaker Zhi Dou's plant

Slovakia could have another carmaker on its already soil. Chinese Zhi Dou, a producer of electric cars, has narrowed down its choice on where to build a European factory to Slovakia or Romania, the ... more

Romania’s government insists anti-corruption head Kovesi must go

Romania’s government has appealed to the Constitutional Court after President Klaus Iohannis refused to endorse the government’s request to dismiss anti-corruption head Laura Codruta ... more

Dismiss