BUCHAREST: Romania's inflation slowed to an annual 3.4 percent in November from October's 3.6 percent, below market expectations and within the central bank's target range.
Slowing inflation allowed the central bank to cut its interest rate for the first time since May 2010 last month, by a quarter point to 6 percent, and it may have space to reduce borrowing costs further next year to support ailing growth.
But it will have to keep a close eye on spillover from the euro zone debt crisis on trade and its banking system and keep a risk premium to maintain investor interest.
Moody's said on Monday Romania's banking system was under pressure because it is largely dependent on the economic and financial market dynamics of the euro area.
Slowing inflation has been helped by a favourable base effect after the centrist coalition government raised value added tax last year, buoyed by steep falls in food prices on a better than expected harvest.
National Statistics Board data also showed the trade deficit narrowed marginally by 0.8 percent on the year to 7.7 billion euros in January-October.
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