Romania Central Bank Keeps Key Rate Unchanged At 6.25%

The central bank’s Board also decided to maintain the current ratios of the minimum reserve requirements at 15% for Romanian leu liabilities and 25% for foreign currency liabilities.

The central bank cut its key rate in four steps this year, to 6.25% from 8% at the end of 2009, while keeping the minimum reserve requirements unchanged.

But the monetary policy ease process came to an end after the government decided to raise the sales tax level by 5 percentage points to 24%, in order to keep the budget deficit in check. The sales tax increase is expected to raise inflationary pressures, and the central bank governor Mugur Isarescu said the inflation may rise to 8% by the end of the year, from 4.4% in May.

In its statement Wednesday, the central bank also said it will act to ensure an adequate management of liquidity in the banking system.