Romania Central Bank Leaves Key Rate Unchanged At 6.25%

Romania’s central bank Tuesday left its main interest rate at a record low of 6.25% a year for the fourth consecutive time as it continues battling rising inflation following a raise in the sales tax.

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The central bank also decided to maintain the current levels of the minimum reserve requirements at 15% for Romanian leu-denominated liabilities and 25% for foreign currency liabilities.

Romanian annual inflation accelerated to a two-year peak of 7.7% in September, driven higher by the introduction in July of a 5 percentage point increase in the value added tax level to 24%.

Central bank governor Mugur Isarescu said recently the bank would remain cautious against possible second-round effects from the tax hike, which are seen pushing the inflation to around 8% by year-end.

Romania's central bank cut its key rate in four steps this year, from 8% at the end of 2009, but kept the minimum reserve requirements unchanged for both local and foreign currency liabilities.

Over the course of 2009, the central bank has lowered the key monetary policy rate by 225 basis points.

The central bank also examined and approved the third-quarter inflation report, which is due for release November 4.

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