NEW YORK -- Romania's central bank decided to keep its monetary policy rate unchanged at 10% on Tuesday despite the sharp economic downturn.
The decision to stay on hold "reflects ongoing concerns about the currency," said Neil Shearing, Emerging Europe economist at Capital Economics. "Our forecast for rates to hit 8% by the end of the year is now in doubt, but we still expect gradual cuts in interest rates from the second half of this year." Romania will receive a financial support package totaling about $27 billion from several multinational institutions, including the International Monetary Fund and the European Union. "An IMF rescue package does not alter the fact that the leu remains fundamentally overvalued," Shearing said.
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