Romanian Ctrl Bker: Key Rate Adjustment Is Not Necessary

“In my opinion, there is no need for an adjustment of the monetary policy interest rate. We have other constraints, at local level, such as electoral cycles different from other countries in the region,” Dijmarescu said.

At its last meeting, end-September, the board of the National Bank of Romania, or BNR, kept its monetary policy rate unchanged, at 10.25% on the year, after seven consecutive increases. The current key rate is effective as of August 1.

“BNR’s board cannot avoid talking about the current market status and it could adopt measures to reach short term effects,” Dijmarescu added.

Asked about safeguarding clauses temporarily introduced by BNR in 2005, Dijmarescu said there is no need to activate them, but, in case of necessity, Romania could ask for European Commission’s approval for such an action.

BNR can adopt safeguarding actions regarding foreign currency operations, if very large short term capital inflows put strong pressure on the foreign currency market and deeply affect the monetary policy and the Romanian leu exchange rate, which could lead to intense variations of internal liquidity and large imbalances of the current account.

Although he said Tuesday that lowering the minimum required reserves ratio for banks’ liabilities is not a priority of the central bank at the moment, Dijmarescu did not firmly leave out the possibility to take such an action in the next meeting of BNR’s board, scheduled for October 30.

BNR’s deputy governor refused to comment about what other actions could be adopted by the central bank, except changing the key rate or the minimum required reserves ratio.