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Isarescu: We will analyse attentively another interest rate drop

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The future BNR Administration Board will analyse attentively any future interest rate reduction, considering the insecure trajectory of long term inflation and will continue to gradually reduce minimal compulsory reserves in lei and foreign exchange, without affecting the currency reserve, said Isarescu at the conference presenting monetary policy decisions made on Tuesday by the central bank.

Isarescu says there is no risk in reversing the trend in the next 12 months and increasing the interest rate.

 

He showed that minimal compulsory reserves in foreign exchange will drop without affecting the level of BNR currency reserves, which suggests that the central bank will continue to buy foreign exchange from the market to compensate amounts issued to banks.

 

This statement represents an indication for the exchange rate, since in the last months BNR thwarted the appreciation of the national currency and even acted for depreciation by buying currency from the market.

 

On the other hand, Isarescu explained that reducing the interest rate was motivated by CEB decisions. “We see how low inflation affects us positively. We are not in danger of deflation and maybe in September, on the background of price drops in September 2013, VAT drop for bread the inflation rate will be over 1%,”Isarescu said. He showed that the situation at European level seems to determine lower inflation in Romania.

 

The BNR official added that the embargo placed by Russia to food produce determined drops of volatile prices, caused not only by cheap food coming from EU and from Moldova.

 

Ïn this period and in the following months inflation will be significantly lower. My final formula is that we cannot be strangers to what is happing in Europe and in the area,”Isarescu concluded.

 

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