Monetary policy rate kept at 3.50%

The central bank decision to maintained the monetary policy rate at 3.5% in March confirmed our anticipation that the cycle of cuts in the key rate that began in July last year and saw a reduction of 175bps concluded in February. During the next period we expect that the central bank will focus on consolidating the monetary policy transmission mechanism.

The remarkable economic growth of 3.5% registered in 2013 was supported firstly by industry and secondly, by agriculture. For 2014 we expect an economic growth of around 2.1%. This year started positively for the industrial production, supported by the strong demand from EU.

Very good money market liquidity prompted the fall of interest rates below the key rate during March. The RON gained ground against the single currency, managing to recover the losses registered in February, with the exchange rate closing at 4.4620, 440pips lower compared to the beginning of the month.

Florentina Cozmâncă
Senior Economist
The Royal Bank of Scotland plc, Edinburgh, Romania Branch