Wednesday, March 28, 2007

Romania:BNR estimates average annual interest rate to drop to 5%

28 March 2007

BNR anticipates that the average annual inflation rate will drop to 5% as against 6.5% registered at the end of 2006, ACT Media news agency reports.

'Statistic evaluations indicate a consolidation of the disinflation process which is provisioned to reflect in the reduction of the average annual inflation rate to the level of 5% in the following period,' shows a press release of the BNR Administration Board. BNR shows that the analysis of recent evolutions in macro economic and monetary fields shows the maintenance of the disinflation process on a trajectory consisting in reaching the inflation target of 4% this year with a variation of plus/minus 1%.

'The annual inflation rate has reduced quicker than anticipated, being 3.81% in February as against 4.01% the previous month, 4.87% in December 2006 and 8.49% in February 2006. The average annual inflation rate dropped to 5.8% in February from 6.56% in December 2006 and 9% in February 2006,' shows a BNR report.

The BNR Administration Board reduced by 0.5% the monetary policy interest rate to 7.5% per year, after cutting 0.75% points in the 9 February meeting, reducing the interest rate from 8.75% to 8% per year. BNR reminds that economy had a high growth rate of 7.7% backed by a robust investment increase and to a smaller extent, by consumer expansion, while the persistent demand excess has determined the deepening of current account deficit.

The central bank maintains stand about exerting cash control adequate to conditions in financial markets by means of market operations.
At the same time, the BNR Administration Board decided to maintain the present level of minimal compulsory reserves – 40% for foreign exchange reserves and 20% for lei reserves.

Source: ACT Media News Agency

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