November 3 (SeeNews) - Romania's central bank, BNR, said on Tuesday it decided to keep its key interest rate unchanged at 8.0% and set its 2011 inflation target at 3.0%, with one percentage point variation band on either side.
Analysts polled by SeeNews last week said they expected the BNR to either cut the key interest rate by 25 basis points to 7.75% or hold it unchanged.
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 of Romanian banks. BNR said it will ensure a firm management of liquidity in the banking system in order to consolidate the transmission of monetary policy signals.
Since the beginning of the year, the central bank has cut the rate five times: to 10.00% from 10.25% in February, to 9.5% in May, to 9.0% in June, to 8.5% in August, and to 8.0% in September.
Romania's annual consumer price inflation slowed down to 4.94% in September from 4.96% in August and 5.06% in July.
BNR said it will discuss its newly-set 2011 inflation target with the government. The inflation target for both 2009 and 2010 is 3.5%, with one percentage point variation band on either side, in accordance with the country’s funding arrangement with the International Monetary Fund (IMF).
“[…] preserving the prospects of a return of the inflation rate close to the established medium-term targets and anchoring inflation expectations require the maintenance of a prudent monetary policy stance,” BNR said.
Moreover, in order to ensure the sustainability of this process and pave the way for a lasting economic relaunch, a rapid fulfillment of the other components of the macroeconomic policy mix of the commitments under the multilateral external financing arrangement with the European Union, the IMF and other international financial institutions is necessary, BNR added.
EU member Romania signed a 20 billion euro ($29.2 billion) aid deal with the IMF, the EU and the World Bank in March to support its crisis-hit economy.
The central bank added it has approved its quarterly inflation report and will present it at a news conference scheduled for Friday.
BNR's next monetary policy meeting is due on January 5.
($ = 0.6829 euro)