Sunday, May 31, 2009

Romanian rate cuts need to be slow - central banker

BUCHAREST, May 31 (Reuters) - Any future cuts in Romanian interest rates should be gradual, without sharp changes, central bank governor Mugur Isarescu was quoted saying on Sunday.
Isarescu said inflation was "obviously" on a downward path and any further monetary easing should follow the pace of changes in consumer price growth.

"An interest rate path in line with inflation, with no sudden moves, is preferable to any other option," he told local news agency Mediafax in comments published on its internet site.
"I don't see how brutal moves should be needed because we do not have major uncertainties over the path of price growth."

The Romanian central bank cut interest rates by half a percentage point earlier in May as the economy slid into recession, damaged by global financial turmoil that wiped out demand for the country's exports and domestic consumption.

Still, local interest rates are at a hefty 9.50 percent, with consumer prices rising just under 7 percent on an annual basis.

Many economists expect interest rates to come down further this year as Romania battles recession.

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