Romania’s National Bank (BNR) decided to lower the monetary policy interest rate to 2.25% from 2.5%, starting February 5. The central bank kept the current levels of minimum reserve requirements ratios unchanged on both leu- and foreign currency-denominated liabilities of credit institutions.

The BNR’s decisions are in line with what most local analysts were expecting.

Record low inflation prompted the BNR board to ease the monetary policy, in order to encourage lending in local currency. The BNR made seven rate cuts since January 2014, reducing the monetary policy rate from 4% to 2.25%.

In the past 12 months, the central bank has also lowered reserve requirements ratios for both foreign and local currency-denominated liabilities of local banks, which translates into more liquidities available for local banks for lending.

These measures somehow stimulated lending in local currency, which increased by 8.5% (end-December 2014 compared to end-December 2013). However, this was offset by the 10.6% drop in foreign currency lending. Thus, the total value of loans granted by Romanian banks went down by 3.1% last year, to EUR 47.2 billion.

editor@romania-insider.com