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Romania's c-bank cuts key rate to 2% from 2.5% as of March 23

Romania's c-bank cuts key rate to 2% from 2.5% as of March 23 National Bank of Romania. Author: Gabriel. Licence: Creative Commons, Attribution.

BUCHAREST (Romania), March 20 (SeeNews) - Romania's central bank, BNR, said on Friday it has decided to cut its monetary policy rate to 2.0% from 2.5%, effective March 23.

The decision is part of a package of measures aimed at mitigating the impact of the coronavirus crisis on households and companies, BNR said in statement.

The central bank also decided to narrow the symmetrical corridor defined by interest rates on standing facilities around the monetary policy rate to ±0.5 percentage points from ±1.0 percentage points.

Thus, starting 23 March 2020, the deposit facility rate stays at 1.50%, while the lending (Lombard) facility rate is lowered to 2.50% from 3.50%. Against this background, the main ROBOR rates are expected to witness a significant downward adjustment, BNR said.

The central bank also said it will provide liquidity to credit institutions via repurchase transactions in government securities with a view to ensuring the smooth functioning of the money market and of other financial market segments.

In addition, BNR will purchase leu-denominated government securities on the secondary market with a view to consolidating structural liquidity in the banking system that should contribute to the smooth financing of the real economy and the public sector.

Depending on how the situation develops, the BNR stands ready to also proceed to cutting the minimum reserve requirement ratios on leu- and foreign currency-denominated liabilities of credit institutions, it said.

In view of the increased uncertainty surrounding economic and financial developments, BNR also decided to hold monetary policy meetings whenever necessary.

The central bank last changed its key rate in May 2018, increasing it to 2.50% from 2.25%.

Romania's consumer prices rose by 3.05% year-on-year in February, compared to an annual increase of 3.6% in the previous month, the national statistical office has said.

BNR decided last month to lower its 2020 inflation forecast to 3.0% from 3.1% predicted in November, still within its target band of 1.5-3.5%. 

(1 euro = 4.8444 lei)