Romania Key Rate Kept Unchanged So Inflation Doesn’t Sidetrack – Ctrl Bker

Romanian central bank’s decision to leave its key rate unchanged at 8% aimed to keep the annual inflation in check, as the market would have proven indifferent to a lower rate, central bank deputy governor Cristian Popa said Friday.

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"We have to consider the persistent inflation. We didn't want the risk to miss the (inflation) target," Popa said after the presentation of the quarterly inflation report.

On Tuesday, the central bank kept its key monetary policy rate unchanged at 8% on the year and left the minimum reserve requirements at 30% for foreign currency liabilities and at 15% for liabilities in lei.

Popa said the measure also aimed at conveying a message of stability, as Romanian bond yields and the credit default swaps have increased significantly after the country's government collapsed early October.

He added that interbank interests are still too high compared with the central bank's key rate and a lower rate would not have solved the problem.

The central bank set an annual inflation target at 3.5% for this year, with one percentage point variation band. On Friday, the bank raised its forecast for the year-end inflation to 4.5%, from 4.3% previously estimated.

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