“There is a structural deficit of liquidity (in the market), which sets the background for a possible reduction of leu-denominated reserve requirements. However, if we are to implement such a decision, it would be done gradually and we’d have to be very carefully so it doesn’t trigger imbalances elsewhere,” Isarescu told a press briefing after a monetary policy meeting.
The central bank Wednesday kept its key rate unchanged at a record low of 5.25% a year, while the minimum reserve requirements remained at 15% for Romanian leu-denominated liabilities and at 20% for foreign currency liabilities.
Internal political turbulence and tensions in the euro-zone have prompted the central bank to keep a tight monetary policy, despite inflation easing to record lows this year.
“Continued uncertainties, particularly regarding the financing resources of Romanian subsidiaries of foreign banks, generate a still rather tensed environment in the interbank market and, subsequently, an increasing usage of the central bank’s credit facilities,” the bank said in a statement.
Additionally, the unpredictable external environment could heighten the risks of increased capital flows and exchange rate volatility, which, coupled with internal evolutions during an election year, calls for a prudent monetary policy stance to further anchor inflationary expectations, the statement noted.