“As we are not sure the inflation will stay low a la longue, I think the future board will carefully adopt any decisions to cut key rate,” Mugur Isarescu told journalists in a news conference to present the latest board decisions.
Earlier Tuesday, the bank cut its key monetary policy rate by 25 basis points to a record low 3% and reduced the minimum required reserve ratio for leu-denominated deposits from 12% to 10%. The minimum required ratio for foreign currency deposits was kept at 16%.
Isarescu said the bank sees no risk of a trend reversal over the next 12 months that will require a rate increase, but such a scenario cannot be excluded.
The governor said any cut of reserve requirements will not affect the foreign currency reserve of the country, thus suggesting the central bank will continue to buy hard currency from the interbank market, to compensate any amounts released to banks.
Isarescu explained the rate cut was also motivated by the recent decisions of the European Central Bank, so that the differential between interest rates on the local and the regional markets will not grow too high.