The central bank also maintained minimum reserve requirement ratios at 8% for deposits in Romanian lei and at 14% for foreign currency deposits.
“Board decisions aim to ensure price stability over the medium term in a manner supportive of economic growth within a sustainable macroeconomic environment, while safeguarding financial stability. To this end, a balanced monetary and fiscal policy mix and the progress in structural reforms are pivotal to preserving macro-stability, ensuring lasting economic growth, further convergence with the European Union, as well as to enhancing the resilience of the Romanian economy to potential shocks or adverse conditions worldwide,” the central bank said in a detailed statement released Wednesday.
It said the latest statistical data reveal a further fall of the annual inflation rate in negative territory and a relative slowdown of the economic growth rate, also as a result of poorer performance of the agricultural sector.
However, the central bank estimates pick-up in private consumption and investment growth, bolstered by the recovery of lending in local currency, to households in particular, along with a sizable advance in unit wage costs across the industrial sector.
The international environment is still marked by uncertainty, while on the the domestic front, the macroeconomic policy mix is conditional on the manner in which the recently approved or announced fiscal and budgetary measures (the new tax code and public sector pay rises) will be transposed into the 2016 budget configuration and execution.
Central bank governor Mugur Isarescu said mid-July the bank will not operate further rate cuts, amid a negative inflation rate and an expected economic growth of around 4% this year.
In July, the Romanian central bank kept the key rate and minimum reserve requirements unchanged due to the Greek crisis and turmoil in the region. Rates remained unchanged in August as well, as the Parliament was expected to adopt the country’s new tax code, which included cuts, most notably in the value-added tax.
The central bank last lowered its monetary policy lending rate in May, from 2% to 1.75% a year. It also lowered reserve requirements from 10% to 8% for local currency deposits.
The central bank eased the key rate four times this year and five times in 2014.
The Romanian central bank’s next monetary policy board meeting is scheduled for November 5.