(Finance) – The Romanian Central Bank has cut the benchmark interest rate by 25 basis points to 6.75% at the end of today’s meeting, implementing the first cut in more than three years, after taking into account the latest available data and the prospect that the annual inflation rate will continue to decline in the coming months on a significantly lower trajectory than previously expected.
The board reiterated that, in the current context, the balanced mix of macroeconomic policies and the implementation of structural reformsincluding the use of European funds to stimulate long-term growth potential, are essential for macroeconomic stability and strengthening the capacity of the Romanian economic system to cope with adverse developments.
The central bank is closely monitoring the developments in the national and international context and is “willing to use the instruments at its disposal to achieve the fundamental objective of medium-term price stability, under conditions that preserve financial stability”.
According to current estimates, the annual inflation rate will continue to decline in the coming months on a significantly lower trajectory than highlighted in the May 2024 medium-term forecast, mainly under the influence of base effects and legislative changes in the energy sector, in a context of slowing import price growth and a gradual downward adjustment in near-term inflation expectations.
However, the war in Ukraine and the conflict in the Middle East, as well as economic developments in Europe, especially in Germany, continue to generate uncertainties and risks as regards the outlook for economic activity, implicitly the medium-term evolution of inflation. Also relevant are the outlook for the conduct of monetary policies by the ECB and the Fed, as well as the stance of the central banks in the region.