September 29 (SeeNews) - Romania's central bank, BNR, said on Tuesday it decided to cut its key interest rate to 8.0% from 8.5%, in line with analyst expectations, citing consolidation of disinflation.
Analysts polled by SeeNews on Monday said they expected the BNR to cut its monetary policy rate by 50 basis points to 8.0% to reflect continuing disinflation and frozen bank lending.
The central bank said in a statement it also decided to maintain the current ratios of minimum reserve requirements on both leu-denominated and foreign currency-denominated liabilities Romanian banks.
BNR said it will ensure an adequate management of liquidity in the banking sector in order to consolidate monetary policy transmission channels.
Since the beginning of the year BNR has cut the key rate four times: to 10.00% from 10.25% in February, to 9.5% in May, to 9.0% in June, and to 8.5% last month.
Romania's annual consumer price inflation slowed down to 4.96% in August from 5.06% in July and 5.86% in June.
The BNR board reiterated that the central bank will continue to closely monitor domestic and global economic developments so as, by using its available instruments, to ensure the fulfillment of its objectives of achieving and maintaining price stability in the medium term as well as financial stability.
"The monetary policy stance stayed prudent, with the BNR permanently calibrating its broad monetary conditions with a view to consolidating the convergence of inflation towards medium-term objectives and ensuring the conditions for a sustainable revival of lending activity," the bank said.
It also said that a firm and consistent implementation of the macroeconomic policy mix – monetary, fiscal and income- as well as of the structural reforms agreed under a 20 billion euro financing arrangement with the European Union, the International Monetary Fund and other international financial institutions are essential for achieving a further sustainable disinflation, maintaining financial stability and for a lasting and sustainable relaunch of economic activity.
The BNR added that starting September 30, the rate on the deposit facility will be lowered to 4.0% per annum from 4.5% and the rate on the lending facility (Lombard) will be 12% per annum versus 12.5%.
At the same time, the penalty rate for deficits of leu-denominated minimum reserve requirements will drop to 18% from 18.75% starting with the October 24-November 23, 2009 maintenance period.