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December 9, 2022

BNR cuts key interest rate to 2 per cent

The Board of the National Bank of Romania (BNR) decided Friday in an emergency monetary policy sitting, to cut the key interest rate to 2 per cent, from 2.5 per cent, as of 23 March 2020, a release by the central bank informs.

“On 20 March 2020, the Board of the National Bank of Romania gathered in an emergency meeting and endorsed a package of measures meant to alleviate the impact of the situation generated by the coronavirus epidemic upon the population and the Romanian businesses. Given the current domestic and international context and based on the information and analyses on the macroeconomic and financial changing developments, he BNR Board decided the following: to cut the monetary policy interest rate by 0.50 percentage points, from 2.5 per cent to 2.0 per cent starting with 23 March 2020; to narrow the symmetrical corridor formed by the permanent facilities’ interest rates around the key interest rate to ą0.5 percentage points, from ą1 percentage point. Thus, as of 23 March 2020, the interest rate for the deposit facility maintains at 1.50 per cent, and the interest rate of the crediting facility (Lombard) gets down to 2.50 per cent, from 3.50 per cent. Given these changes, it is expected that the main ROBOR (inter-bank offered rate) quotations see a significant descending adjustment,” a release by the BNR issued on Friday reads.

Moreover, the BNR Board decided to supply with liquidities the credit institutions through the repo operations (gov’t securities reversible operations) aiming to ensure the fluent functioning of the monetary market and other segments of the financial market, too.

Another decision aims at purchasing lei-denominated gov’t securities from the secondary market with a view to strengthening the structural liquidity of the banking system capable to contribute to the financing in good conditions of the real economy and the public sector.

The BNR release also says that the central bank could reduce the minimum reserve ratio if the situation warrants it. Likewise, the Friday sitting of the BNR board has also decided to suspend the announced calendar of the monetary policy meetings with the stipulation that they will take place whenever necessary.

The key interest rate had not been changed since May 2018.

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