Romania Central Bank Leaves Key Rate Unchanged At 6.25%

Romania’s central bank Wednesday left its main interest rate at a record low of 6.25% a year for the fifth consecutive time as the inflation is still above the bank's target interval.

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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 stood at 7.7% in November, significantly above the central bank's 4.5% upper limit of the target interval.

For 2010, Romania's central bank aimed at an annual rate of 3.5% end-December, plus/minus one percentage point, but the inflation is likely to overshoot the boundaries, due to the negative contribution of a five-percentage point increase in the sales tax introduced early July.

The central bank cut its key rate in four steps last year, from 8% at the end of 2009, while keeping the minimum reserve requirements unchanged for both local and foreign currency liabilities.

Analysts expect the central bank to resume easing the monetary policy to support the lagging economy, once inflation re-enters the target interval. In 2011, the central bank targets a band of 3% plus/minus one percentage point.

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