Thursday, February 2, 2012

Romania Will Lower Interest Rate for Third Time, Survey Shows

By Irina Savu

Feb. 2 (Bloomberg) -- Romania’s central bank will probably reduce its benchmark interest rate by a quarter of a percentage point for a third consecutive meeting as policy makers see inflation slowing to a record.

The Banca Nationala a Romaniei will cut its main interest rate to an all-time low of 5.50 percent, according to 13 of 15 economists surveyed by Bloomberg. A decision will be announced today after 11 a.m. in Bucharest.

Romanian central bankers are among policy makers in countries including Brazil, Chile, Russia, the Philippines, Israel, Norway, Moldova, Thailand and Serbia who have eased monetary policy amid concerns that Europe’s debt crisis will quash economic growth.

“Underlying inflationary pressures remained low, administrative prices will most likely remain unchanged in the first quarter and the mood on the external markets is not very bad at the moment,” Raiffeisen Bank Romania SA economist Nicolae Covrig wrote in a report to clients. “So the context seems favorable for a new cut in the key rate and we think the central bank will not miss the opportunity.”

The country’s economy, which probably grew a faster-than- expected 2.5 percent last year, will see growth slowing this year to between 1.8 percent and 2.3 percent on falling exports to crisis-stricken western Europe, Jeffrey Franks, the International Monetary Fund’s mission chief to Romania, said on Nov. 7.

The IMF may lower its estimate for Romania this year to as low as 1 percent, Ziarul Financiar reported on Jan. 30, citing unidentified people. The economy may expand between 1 percent and 1.5 percent in 2012, slower than a previous forecast of 1.8 percent to 2.3 percent, the newspaper said.

Romania’s inflation rate will probably fall to below 2 percent in the second quarter from 3.1 percent in December and end this year at 3 percent, making room for further interest- rate reductions, Central Bank Deputy Governor Cristian Popa said at a Euromoney conference in Vienna on Jan. 17.

-- With assistance from Barbara Sladkowska in Warsaw. Editors: James M. Gomez, Alan Crosby

To contact the reporter on this story: Irina Savu in Bucharest at

To contact the editor responsible for this story: James M. Gomez at

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