The central bank also maintained the minimum reserve requirements unchanged at 15% for Romanian leu-denominated liabilities and at 20% for foreign currency liabilities.
Romania’s annual inflation rate slowed to 4.56% at the end of November, from 4.96% in the twelve months through October.
The central bank noted that the “prospects remain favorable for the annual inflation rate to return inside the target band by the end of the year, but risks and uncertainties related to the developments in the external environment, capital flows, administered prices and some volatile prices still persist.”
The central bank targets an annual inflation of 2%-4% at the end of 2012 and of 1.5%-3.5% for 2013.
Despite the disinflationary trend in the last months of 2012, analysts estimate inflation pressures remain high, as energy price increases are expected. Therefore, the central bank is more likely to keep a prudent stance at the next board meetings, analysts estimated.
The board’s decisions “are aimed at resuming and consolidating disinflation, whose outlook is further marked by risks and uncertainties related to domestic developments, including the persistence of structural rigidities across the Romanian economy as well as the euro area and global economic recovery,” the central bank said in a detailed statement following Monday’s board meeting on monetary policy issues.
The central bank noted investors’ risk perception of Romania improved in recent months, as the country met the fiscal and budget parameters agreed with the International Monetary Fund, while a new election cycle completed in December and a new government took office. As a result, pressures on the exchange rate and the interbank rates alleviated.
However, the feeble dynamics of industrial production and retail trade, as well as the protracted euro area recession entailing adverse effects on exports still impact Romania’s economy, while private lending’s growth slows down.
The central bank’s next board meeting on monetary policy matters is scheduled for February 5.