Romania Ctrl Bk Raises Key Rate To 9.75% From 9.5%

Romania’s central bank Tuesday raised its main lending rate by 25 basis points for the fifth time in a row to 9.75% from 9.5%, in a bid to slow peaking inflation, and took further steps to temper money market rate volatility, the bank said in a statement.

 

The bank said three additional measures were taken to align policies to the European Central Bank practice and reduce the volatility of money market rates.

 

The measures will reduce the maturity of the central bank’s deposit-taking market operations to one week from two weeks, in a bid for more efficient excess liquidity draining.

 

Commercial banks and other lenders will also benefit from higher rates of 5.75% from 2% on the central bank’s deposit facility. However, the central bank also upped rates on its lending facility, or Lombard rate, to 13.75% compared with 12%.

 

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.

 

However, the bank’s board decided to increase the penalty rate for deficits of leu-denominated minimum reserves to 20.5% from 18% per year.

 

The bank reiterated its goal to closely monitor developments in macroeconomic indicators "to assess their outlook, in a bid to permanently ensure the broad monetary conditions needed to counteract inflationary pressures and attain the medium-term disinflation objectives in a sustainable manner."

 

The bank’s board also approved a quarterly inflation report, which will be presented on May 8 in a press conference. The next rate-setting bank meeting is scheduled for June 26.