Romanian Decision to Maintain Rates Was Unanimous, Minutes Show

  • Central bank discussed possible interest-rate corridor changes
  • Key rate was held at 1.75%; minimum FX reserves were cut

Romania’s central bank was unanimous in its decision to hold the benchmark interest rate at a record low and trim banks’ minimum reserves requirements, minutes of last week’s meeting showed.

Monetary-policy makers, weighing persistent deflation against a surging economy, kept borrowing costs at 1.75 percent for an 11th meeting and eased minimum reserve requirements for foreign-currency deposits to 10 percent from 12 percent. Board members also discussed potential changes in the interest-rate corridor used to manage liquidity.

“A large part of the board members were of the opinion that developments in economic growth warranted close scrutiny in terms of potential risks of overheating, although it was pointed out that no such signs had been visible yet,” the Banca Nationala a Romaniei said in a statement published Friday on its website, marking the start of the regular release of minutes from the bank’s rate-setting meetings. “The discussions emphasize the need for a balanced macroeconomic policy mix with a view to consolidating the domestic economy.”

The bank sees the longest bout of consumer-price declines since communism reversing in 2017, with the economy already expanding at an annual 6 percent last quarter on the back of tax cuts before parliamentary elections set for December. Romania’s leu has weakened 0.9 percent against the euro since the cut in minimum reserves is expected to free up foreign currency. That reduced the leu’s gain this year to 0.7 percent.

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