Romania will enter a period of key interest rate reduction starting from the next monetary policy meeting of the country's Central Bank BNR board, which will be held at the beginning of July, according to BNR governor Mugur Isarescu. This is a first coming from the BNR, which usually does not announce when it plans to cut or increase the key interest rate, In its most recent board meeting on Thursday (May 2 ), the BNR decided to keep the interest rate at 5.25 percent. Romania currently has the highest key interest rate in the EU. The last cut in the country's key interest rate was in March, from 5.5 to 5.25 percent, after a similar move in February.

The decision to start decreasing the key interest rate earlier than anticipated – which was originally for the second half of the year – was made after inflation dropped faster than expected, with historical minimum rates in February, March, and a similar evolution in April.

Isarescu said he hopes the news from the economy side, including agriculture, which is very much tied to the weather, would not interrupt the planned decrease in the key interest rate. “In any case, we will not be isolated from the rest of Europe,” said the Governor. The European Central Bank recently cut the eurozone interest rate to a historic minimum, 0.5 percent. The widely-expected cut to 0.50 percent from 0.75 percent was the first in 10 months.

BNR reduced the key interest rate from 6.25 percent to 6 percent in November 2011. Romania was the first of the emerging EU countries to cut the key interest rate in May 2010, from 6.5 percent to 6.25 percent, in order to stimulate economic recovery. In December 2009, the key policy rate was of 8 percent and gradually decreased throughout 2010.

editor@romania-insider.com