Romania's c-bank cuts key rate to 6.75%

The central bank, BNR, also decided to decrease the deposit facility rate to 5.75% per year from 6%, as well as the lending facility rate to 7.75% from 8%, it said in a statement after a board meeting on monetary policy. The existing ratios of minimum reserve requirements for both leu- and foreign currency-denominated liabilities of banks will remain unchanged.

The decisions aim to ensure and maintain price stability over the medium term, in a manner conducive to achieving sustainable economic growth, BNR said.

The annual inflation rate saw a faster-than-anticipated decline in the first two months of the second quarter of 2024, falling to 5.12% in May from 6.61% in March, primarily due to a notable drop in energy prices as well as thanks to the further slowdown in the growth of food prices.

The BNR's current assessment sees inflation decreasing further over the following months, on a significantly lower path than that shown in the May 2024 medium-term forecast, mainly as a result of base effects and legislative changes in the energy field, as well as amid the deceleration in import price growth and the gradual downward adjustment of short-term inflation expectations.

The current decision to cut the key rate came after eleven consecutive decisions to leave it unchanged. The BNR last changed its policy rate on January 11, 2023, increasing it from 6.75% to 7%.

The central bank will hold its next monetary policy meeting on August 7.