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 now has the highest key interest rate in the European Union, after Hungary’s central bank earlier this week reduced its main rate by 0.25 basis points to a record low of 5%.
On the other hand, the country has also the highest annual inflation among member states.
Central bank governor Mugur Isarescu said Wednesday that his institution couldn’t loosen its monetary policy stance due to inflationary expectations deriving from supply shocks.
“I don’t think that a more relaxed monetary policy would help,” Isarescu said.
Romania’s annual inflation eased to 5.65% at the end of February, from a year-and-a-half high of 5.97% in the previous month. The rate is expected to accelerate up to 6% in the first half of 2013 before easing toward the upper end of the bank’s target range of 1.5%-3.5%.
The central bank has been keeping a “prudent” monetary stance in order to anchor inflation expectations amid a temporary spike in prices and increased volatility of capital inflows following renewed tension in the eurozone, which dampened investor appetite, the bank said in a detailed statement later Thursday.
“The bank’s current assessments reconfirm the prospects that the annual inflation rate will enter a downward trend, though it will remain outside the target band over the coming months,” the statement noted.
The central bank said the weak domestic demand would be the main driver of the disinflation process in the following period.
On the other hand, by using monetary instruments other than the key rate, the central bank has helped improve liquidity levels in the money market, which led to a “significant decline” of interbank rates, the statement noted.
“With interbank rates nearing the monetary policy rate, the latter is even better transmitted into the market and this has a positive effect on leu-denominated loans following the gradual reduction in financing costs for both the real economy and the government sector,” the central bank said.