Romania Ctrl Bk Ups Interest Rates To 9.5% From 9%

The bank reiterated its goal to closely monitor developments in macroeconomic indicators to “counteract inflationary pressures in order to re-enter as fast as possible the announced medium-term disinflation trajectory in a sustainable manner.”

Romania’s inflation jumped 6.6% last year, exceeding the bank’s target band of 3%-5%, and reached 8% in February, its highest level since March 2006.

For 2008, the Romanian central bank has set an inflation target of 2.8%-4.8%, but expects it at 5.9% by yearend. However, analysts say prices might register double-digit growth this year, if Romania’s farming output is again hit by drought or floods.

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The bank also said it has left unchanged the existing minimum reserve requirement ratios for both leu and foreign currency-denominated liabilities for banks and other lenders.

The Romanian leu strengthened slightly against the euro to RON3.7120/RON3.7140 at around GMT 0940 from RON3.7130/RON3.7150 at open, showing little reaction to the bank’s predictable decision to raise rates.

“The leu’s appreciation was not spectacular because the bank’s decision was in line with analyst expectations,” said a dealer at a Bucharest-based bank.

Dealers are waiting for the bank’s detailed statement due at around GMT1230 to get insights on the bank’s future moves.