One More Rate Cut To Come

The National Bank of Romania (NBR)'s decision to cut its policy rate by 25 basis points (bp), to 5.75%, on January 2, is in line with our end-2012 benchmark policy rate forecast of 5.50%. Despite disinflation now taking hold and growth concerns coming to the fore, we still expect the NBR will only pursue one more 25bp rate cut as risks of a currency sell-off remain elevated.

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