“Inflationary expectations remain rather high in Romania compared with other countries in the region, despite massive price decreases. However, the expectations are declining,” Isarescu said at the presentation of the central bank’s quarterly inflation report.
He said the population has a hard time trusting there will be no more substantial price increases in the following period and keeping a high key interest rate would have added to fears that the disinflation was short-lived.
“This was one of the reasons that prompted the rate cut, despite the turmoil in Greece, because we know that the disinflation will continue,” Isarescu said.
The central bank last week lowered its main interest rate by a quarter of a point to a record low of 6% a year, the first cut in a year and a half.
Isarescu said the bank has sufficient room for more easing, but stressed the monetary policy must remain prudent, indicating further cuts would remain at around 25 basis points.