“We must pay attention to the country’s economic and financial stability. The European climate is rather difficult, as the financial and banking system are being restructured. Added the internal political developments and we had to interrupt our easing cycle,” Isarescu told a news briefing.
Isarescu said it would be premature to say whether the central bank will resume its monetary policy easing and stressed that the authorities must continue the fiscal and economic program agreed with the International Monetary Fund and the EU.
The central bank’s chief said the low inflation rate would theoretically allow further rate cuts, but, in light of the recent political events, the easing cycles had to be interrupted.
The decision to leave the key rate unchanged was also meant to “annihilate” the effects of a possible abrupt depreciation of the national currency, Isarescu said.
The leu fell to record lows against the euro after a center-right government led by Mihai Ungureanu was overthrown in a no-confidence vote Friday, pushing through a psychological threshold of 4.4 units versus the European common currency.
“The decline is small, below 2% to 3% against the euro,” Isarescu said.
The central bank Wednesday put its main rate on hold at a record low of 5.25% a year, as political uncertainty following the government’s fall last week ended a monetary easing process initiated in November 2011.