Romania’s central bank may surprise analysts by reducing its key interest rate to the lowest in at least seven years after a measure of inflation fell, according to ING Groep NV.

“Doves in the Banca Nationala a Romaniei might pressure” for more than the 0.5 percentage point cut expected by analysts, lowering rates 0.75 percentage point to 6.75 percent, ING wrote in a research report dated yesterday. “Such a bold move has significant positive implications.”

The inflation rate was 4.7 percent in December. The so- called CORE3 inflation, the central bank’s “favored” measure of consumer prices, slowed “sharply” and will probably continue “the downtrend” given “weak demand,” ING wrote.

Banca Nationala a Romaniei on Jan. 5 unexpectedly reduced its monetary policy rate by 0.50 percentage points to 7.5 percent, the lowest since January 2008, after the appointment of a government ended a political stalemate. Eastern Europe’s central banks are still cutting rates to revive economies that plunged in the world’s deepest contraction last year. Romania’s economy shrank 7.1 percent on an annual basis during the third quarter.

Eight of 11 analysts surveyed by Bloomberg predict the central bank will reduce the main rate to 7 percent tomorrow, two expect a cut to 7.25 percent. ING is the only bank expecting a reduction to 6.75 percent, the survey shows.

The central bank reduced its main rate from 19.75 percent in January 2003 to 7 percent in June 2007 and raised it to 10.25 in August 2008, according to central bank data.

Leu Gains

The leu weakened 0.4 percent to 4.0964 per euro as of 4:32 p.m. in Bucharest. It rallied yesterday to its strongest in more than a year, and has gained 3.8 percent against the euro so far this year, the biggest advance of the European Union’s eastern members. An International Monetary Fund mission said last week it would recommend reviving a $30 billion bailout loan. The loan was frozen on Nov. 6 after political infighting toppled the government.

The IMF demanded the formation of a new government and the passage of the budget before resuming payments. Prime Minister Emil Boc put together a Cabinet on Dec. 23 and lawmakers approved the spending and revenue plan on Jan. 14.

The yield on the country’s 11 percent coupon bonds maturing in March 2014 has fallen to 7.95 percent from 10.05 percent at the end of last year, according to Raiffeisen prices available on Bloomberg.