Resuming of budgetary salaries, "with a limited impact”

The National Bank of Romania’s Governor Mugur Isărescu said Thursday that the National Bank of Romania( BNR)’s decision to reduce the monetary policy interest rate to a new historically low level of 5.25 percent is stimulating credits.

Reunification of budgetary salaries will have a limited impact if the budget target agreed with the IMF will be respected, said Mugur Isărescu.

He explained however that the effect will not be immediate, because "we have a reduction in inflation and also a European problem related to the reduction of financial intermediation".

National Bank of Romania’s Governor underlined that "we want this process to be controlled, we act in this respect, show that this phenomenon, this overlap is the main reason for reducing the transmission of monetary policy interest rate, does not reach very quickly the commercial banks and the customer ".

Moreover, Isarescu explains that "we encourage this process and hope that in this way, signal transmission from us, for the Central Bank, until the interest rates on loans and deposits will be slightly faster."

The statements of the National Bank of Romania governor come after on Thursday, the BNR Board decided to reduce by 0.25 percentage points the interest rate of monetary policy, from 5.5% to 5.25% per year, new historically low rate in line with analysts' expectations, and to maintain the odds for these minimum reserve holdings by banks.

Central bank reduced interest rate by 0.75 percentage points from earlier this year, after cuts of 0.25 points in Board meetings from January and February.

Key rate is now at a historically low rate of 5.25 percent.


Translated by Ioana Vioreanu
MTTLC, Bucharest University