Romania’s central bank cuts monetary policy rate to record low

Newsroom 04/02/2015 | 14:12

The National Bank of Romania (NBR) will slash the monetary policy rate by 25 basis points to a new record low of 2.25 percent starting with 5 February 2015, the NBR announced on Wednesday in a press release.

This is the fourth cut that the central bank has operated since August last year when the monetary policy rate was lowered from 3.5 percent to 3.25 percent. Analysts say this most recent reduction was to be expected and another one is estimated to take place by yearend which could lower the level to 2 percent, according to Mediafax news agency.

The central bank’s board has also decided “to narrow the symmetrical corridor of interest rates on the NBR’s standing facilities around the policy rate to ±2.00 percentage points from ±2.25 percentage points. Thus, starting 5 February 2015, the interest rate on the NBR’s lending facility (Lombard) will be lowered to an annual 4.25 percent from 4.75 percent, while the deposit facility rate will remain at 0.25 percent per annum,” reads the press release.

The NBR also announced that it pursues an “adequate liquidity management” in the banking system, and that it will maintain the current levels of minimum reserve requirements ratios on both RON- and foreign currency-denominated liabilities of credit institutions. This currently stands at 10 percent (RON) and 14 percent (foreign currency), but analysts says that these levels could be lowered to 8 percent (RON) and 10 percent (foreign currency) by yearend.

Simona Bazavan

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