“The annual inflation rate is lower than originally estimated and we expect it will remain below 2% during the first half of 2014 as well. The lower inflation allows the central bank to continue its monetary easing cycle with a view to stimulate leu-denominated loans,” said Rozalia Pal, AAFBR vice-president and chief economist with Garanti Bank Romania.
She said cheaper loan costs might help boost economic growth in 2014.
Romania’s central bank in September reduced its main lending rate by 25 basis points to 4.25% a year, the third consecutive cut this year. The minimum reserve requirements were left unchanged at 15% for Romanian-leu denominated liabilities and at 20% for foreign currency liabilities.
Central bank governor Mugur Isarescu said that a lower monetary policy rate should send a positive signal to the market and prompt bankers to reduce interest rates on leu-denominated loans.