The new board of Romania’s National Bank (BNR) decided to lower the monetary policy interest rate for local currency (RON) from 3% to 2.75%, on its first monetary policy meeting on Tuesday, November 5.

The move had been anticipated by local analysts, who expect the monetary relaxation to continue with a new interest rate cut in the beginning of 2015.

The BNR board also decided to cut the minimum reserve requirements ratio on foreign currency-denominated liabilities of credit institutions to 14% from 16%. The minimum reserve requirements ratio on RON-denominated liabilities was kept at 10%.

BNR has made five interest rate cuts so far this year, bringing the monetary policy interest rate down from 4% at the end of December 2013, to 2.75%. The central bank 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.

The central bank also instructed local banks to accelerate the portfolio clean-up process by removing bad loans from their balance sheets. All these measures are aimed at reviving the frail lending activity and to help economic recovery.

editor@romania-insider.com