Citi doesn't see more room for rate cuts

High inflation rate and weak demand in the economy does not leave the National Bank of Romania room for a rate cut larger than 0.25 percentage point or 0.5 percentage point at the most, Citibank said in a report.

The National Bank of Romania will not have room for another rate cut larger than 25 basis points or 50 basis points at the most, Citibank analysts said, due to the rising oil prices and sticky inflation expectations overshadow the inflation outlook.

Citibank expect the inflation rate to come in at 4.5% in December, below the upper limit of the central bank’s tolerance range.

The National Bank of Romania lowered its benchmark interest rate by 50 basis points in today’s rate-setting session, to 6.5%, the lowest level since the adoption of inflation targeting monetary policy.

The National Bank of Romania had cut the key rate in January by 0.5% and by another half percentage point in February, this being the third in a series of rate cut that continued this year.

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