The National Bank (NBR) yesterday decided to maintain its intervention rate at 8.75% a year, without taking any further steps. The bank did this in order to be able to see the full effects of the decisions made during its June session.

In the release issued after the monetary policy session yesterday, the bank announces a new target for the inflation in 2008, 3.8%, maintaining the fluctuation interval of plus or minus one percent.

The release does not say anything about next year's inflation; the initially announced target was 4%, minus or plus one percent. At the same time, the monetary authority announces it will continue to exert a firm control over the monetary market liquidity.

NBR explains its decision to maintain the same monetary conditions has stemmed from the better than expected inflation trend.

"The macroeconomic indicators reveal continued disinflation, more visible than in the previous forecast, amid a slowdown of the dynamics of the controlled prices and of the volatile foods prices, as well as a result of the progressive tightening of the monetary conditions," the NBR release reads.

The central bank in June took harsh steps to temper lending in RON, which had picked up a lot of speed since last autumn. NBR at that time decided to raise the intervention rate by 0.25% to 8.75%. The harsher step, however, was the increase of the rate of minimum mandatory reserves in RON by four percent to 20%. This measure forced commercial banks to immobilise more cash with the NBR, so that the excess liquidity on the market suddenly decreased. Interests on the monetary market rose sharply, once the new minimum mandatory reserve rate was enforced at the end of July, by about 2% per annum to 13-16% per annum. Interests have gone down only slightly until now, despite the significant amounts of money that entered the market, after large volume