Romania Ctrl Bk Cuts Key Rate By 50 Bps To 7.5%

The new rate is applied as of January 6, the central bank said in a statement.

Last year, the central bank cut the key rate five times, from 10.25% in January to 8% in September, in an effort to support the ailing economy, as Romania’s gross domestic product is expected to fall by 7% in 2009.

In a November meeting, the central bank’s Board stopped its monetary policy cuts and kept the key rate at 8% on the year, to keep inflation in check.

However, in a special meeting held mid-November, the bank lowered the minimum reserve requirements on foreign currency-denominated liabilities to 25% from 30%. The minimum reserve requirements for leu liabilities are at 15%.

In its Tuesday meeting, the central bank’s Board also decided to ensure a firm management of liquidity in the banking system in order to consolidate the transmission of its monetary policy signals.

The next Board meeting dedicated to monetary policy issues is scheduled for February 3.