BNR lowers monetary policy rate to 8.5 percent per annum

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At a meeting on Tuesday, the Administration Board of the National Bank of Romania (BNR) decided to lower the monetary policy rate of BNR to 8.5 percent per annum from 9.0 percent starting with August 5, 2009.

The board also decided to lower the minimum reserve requirements ratio on foreign currency- denominated liabilities with residual maturities of up to two years to 30 percent from 35 percent starting with the August 24-September 23, 2009, maintenance period.

It also decided to actively use open-market operations in order to ensure an adequate management of liquidity in the banking system and reduce to one week from one month the maturity of the main monetary policy instrument, the repo operations via auctions.

The BNR Board also examined and approved the quarterly Inflation Report, which will be released to the public in a press conference scheduled for August 6, 2009.

At a previous meeting this June, the BNR Administration Board decided to cut the bank’s monetary policy rate to 9 percent per annum, from 9.5 percent, as from July 1, 2009.

In order to ensure smooth liquidity flows and the continuation of a gradual alignment to European Central Bank standards, the BNR Board also decided to cut the minimum reserve requirements ratio on hard currency-denominated liabilities of credit institutions to 30 percent, from 35 percent, for residual maturities of up to two years starting with the August 24-September 23, 2009, maintenance period.

The board noticed that the annual inflation rate stood at 5.86 percent in June versus 5.95 percent in May and this year’s peak of 6.89 percent in February 2009.

The adjusted annual CORE2 inflation – calculated by excluding the impact of administered and volatile prices (vegetables, fruits, eggs and fuel) as well as the effects of vice tax – dropped to an annual rate of 4.79 percent in June from 5.04 percent in the previous month.

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