Romania Ctrl Bk To Leave Key Rate Unchanged At 6.25% - Analysts

"I believe the central bank will keep its key rate and the minimum requirements unchanged. As this August showed us, the second round of effects (following a 5-percentage point increase in the sales tax a month earlier - e.n.) is not very consistent, but the economic environment doesn't allow a lower rate right now," said Lucian Anghel, chief economist at Banca Comerciala Romana, or BCR.

"It's hard to cut the monetary policy rate when the inflation is quite high," Anghel told MEDIAFAX.

Romanian consumer prices inched up 0.23% in August after a 2.6% increase a month earlier, while the annual inflation accelerated to 7.58%, following the sales tax increase in July.

"The central bank will probably wait for additional effects of the higher value added tax level (…). Maybe after the International Monetary Fund's visit in October, the central bank will have more data and things may get clearer," added Ionut Dumitru, chief economist with Raiffeisen Bank Romania.

Nicolae Chidesciuc, chief economist at ING Bank Romania, also concurred with the analysts' projection that is too early for the central bank to make a move regarding the key rate.

Romania's central bank will meet Wednesday to discuss monetary policy issues and decide on the key rate and minimum requirements levels.

At the latest monetary policy meeting August 4, the bank left its key rate unchanged at 6.25%.

The central bank cut its key rate in four steps this year, from 8% at the end of 2009, while keeping the minimum reserve requirements unchanged at 15% for Romanian lei and at 25% for hard currency.

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

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