Oxford Economics: BNR to cut key-interest to 5.5pc in 2010

Romanian Central Bank (BNR) will cut the key-interest rate from the current 7.5 per cent to 5.5 per cent by the end of this year, relaxation which will nevertheless be partly blotted out by the fiscal constraints implemented by the Government as part of its programme with the IMF, 'Oxford Economics' analysts anticipate, according to Mediafax. ''With a view to economic contraction figures, the central bank has had the possibility of relaxing monetary policy as soon as political tensions had been reduced and when the accord with the IMF was going to be resumed.

BNR therefore cut the key-interest by 0.5 percentage points to 7.5 per cent on January 5 and may operate a further 0.5 percentage points cut at the beginning of February' reads the 'oxford Economics' January report cited by Mediafax. 'Oxford Economics' forecasts an inflation rate of 3.4 per cent in 2010 and of 3.9 per cent in 2011. 'The relaxation of the monetary policy in 2010 will be partly offset by a more severe tax policy the Government is implementing as part of its agreement with the IMF. (…) The Fund continues to recommend a tax correction of 2 - 2.5 GDP in 2010 towards reducing budget deficit to less than 6 per cent GDP' the report also mentions.

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