Romania Ctrl Bk Likely To Cut Rate Again Monday – Poll

„The adjusted CORE2 inflation dropped below 2%, which may allow trimming the key rate by over 50 basis points,” said Nicolae Chidesciuc, chief economist at ING Bank Romania.

The central bank cut its key rate twice so far this year, to 7% from 8% in December 2009. An additional 50 basis point cut to 6.5% would bring the rate to its lowest level ever.

According to Chidesciuc, a further monetary policy easing will help stop the leu’s appreciation over the next three to six months.

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Ionut Dumitru, chief economist at Raiffeisen Bank Romania, expects a quarter-point reduction of the rate, saying the central bank is likely to take a more prudent approach on Monday.

„I suspect the central bank will take small steps from now on and will trim the rate by 25 basis points each during the next two monetary policy meetings,” he said.

Dumitru added the central bank will afterward keep the key rate at 6.5% until the fourth quarter, when it will ease by another quarter-point, depending on the inflation.

Romanian annual inflation slowed to 4.5% in February, faster than market expectations of 4.6% year-on-year, boosting scope for more rate cuts in the first part of the year.

The central bank targets inflation at 3.5% in 2010, plus or minus one percentage point.