Romania Ctrl Bank Says Falling Inflation Good Reason To Cut Rates

However, the central bank must also consider the passive interests of commercial lenders, as their current level is still too high, Isarescu said.

„The banks still have very high interests on deposits and they lower them with caution. It would be unnatural for the central bank to take big steps (in that direction). We will gradually lower them,” Isarescu said.

He added interests on household deposits should be below 6%.

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Economists expect the central bank to cut its key rate by another 50 basis points to 6.5% Monday, in a move aimed to support consumption and ease the leu’s appreciation against the euro.

The bank has trimmed the rate twice so far this year, from 8% at the end of 2009.

Romanian annual inflation slowed to 4.5% in February, boosting scope for more rate cuts in the first part of the year.