“Looking at the latest inflation projections, there may still be room [for further rate cuts]. However, we’ve had and still have reservations,” Isarescu said after the central bank’s monetary policy meeting.
The bank cut its key lending rate by 25 basis points to a record low of 3.25% a year, but kept the minimum reserve requirements unchanged for both leu and foreign currency deposits.
The bank also reduced its forecast on the year-end inflation to 2.2% from 3.3% previously, saying the inflation rate is expected to decelerate at a faster pace than initially estimated.
“We’ve seen a very favorable evolution of the annual inflation rate, definitely also influenced by external factors,” Isarescu told reporters.
Apart from the low inflation, Romania also benefited from higher capital inflows following the tensions between Ukraine and Russia.
“I didn’t expect to see such cash inflows following the crisis in Ukraine,” Isarescu said.
He said the central bank’s net reserve rose by some EUR2 billion in the February-July period.