BNR lowers the monetary policy rate to 3 pct and cuts the cash reserve ratio to 10 pct

The Board of Romania’s Central Bank, BNR, lowered again the monetary policy rate to 3 percent, a new historic low, after a similar measure taken during the previous meeting when it was reduced from 3.50 to 3.25 percent.

Another important decision taken during the board meeting concerns the required reserve ratio which has been lowered on leu-denominated liabilities of credit institutions to 10 percent from 12 percent, while keeping unchanged the ratio on foreign currency liabilities.

The new monetary rate will be effective as of October 1, while the cash reserve ratio will be in force between October 24 and November 23, 2014.

“With a view to mitigating inter-bank money market rate volatility, the BNR Board decided to narrow the symmetrical corridor of interest rates on BNR’s standing facilities around the policy rate to ±2.75 percentage points from ±3 percentage points. Thus, starting October 1, 2014, the interest rate on the BNR’s lending facility (Lombard) will be lowered to an annual 5.75 percent from 6.25 percent, while its deposit facility rate will remain at 0.25 percent per year”, states a press release BNR.

Also, BNR decided to pursue an adequate liquidity management in the banking system, restating that the adequate use of its available tools amid a close monitoring of domestic and global economic developments is aimed at ensuring price stability over the medium term and financial stability.