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UPDATE 1- Romania c-bank holds key rate at 1.75%

UPDATE 1- Romania c-bank holds key rate at 1.75% National Bank of Romania. Author: Gabriel. Licence: Creative Commons, Attribution.

BUCHAREST (Romania), November 4 (SeeNews) - Romania's central bank, BNR, maintained on Friday its monetary policy rate at a record low of 1.75%, in line with analysts' expectations.

BNR's board also decided to retain the minimum reserve requirement ratios on both leu- and foreign currency-denominated deposits at 8% and 10% respectively, it said in a statement.

At its previous policy meeting in September the bank lowered minimum reserve requirements on foreign currency liabilities to 10% from 12%.

BNR last changed its monetary policy rate in May 2015, when it cut it by 25 basis points to 1.75%. Romania's annual consumer price deflation accelerated to 0.6% in September from 0.2% in August.

"The risks and uncertainties associated with the inflation outlook stem from both domestic and external sources. On the domestic front, risks relate primarily to the configuration of the 2017 budget," BNR said in its a press release following its board meeting. "Risks from the external environment are mainly generated by the lingering uncertainties about global economic growth and euro area economic recovery, given the slow-in-coming rebound of major emerging economies, the challenges facing the European banking system, and the outcome of the UK referendum."

"Based on currently available data and in the context of these elevated uncertainties, the Board of the National Bank of Romania decided to keep unchanged the monetary policy rate at 1.75 percent per annum, to further pursue adequate liquidity management in the banking system, and to maintain the existing levels of minimum reserve requirement ratios on both leu- and foreign currency-denominated liabilities of credit institutions," it added.

ING Bank analysts said on Friday that they were expecting BNR to leave the key rate unchanged.

"The first meeting in 2017, on 6 January, will also see some uncertainties related to fiscal initiatives ahead of 11 December general elections, with significant impact on inflation outlook, disappearing or their probability will be lower. Provided no major surprises happen, we see BNR opening room in January for narrowing of the standing facilities corridor at the 7 February meeting," the analysts said in a ING EMEA/Romania report.

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