The Board of Directors of the NBR yesterday decided to cut the policy rate from 5.25%/year, to 5.5% a year, a communiqué of the Central Bank states. This level represents a new historical low. The minimum required reserves for deposits in lei and foreign currencies will remain unchanged, the press release mentions. The NBR will also carefully monitor the liquidity in the banking system, according to the document.

Mugur Isărescu, the Governor of the NBR, said that the monetary policy measures of the Central Bank are felt quicker by the market for government bonds and more slowly by the commercial banks. He said that it was unfortunate that the cuts of the policy rate have overlapped with the tensions in Europe, and especially among commercial banks in the Eurozone.

When asked about the impact which a possible cut of the minimum required reserves would have, the manager of the Central Bank explained that Romania has a certain duality, as on one hand the market is lacking liquidity, which is reflected in the weekly refinancing which some banks do with the NBR, and on the other hand, some banks have a liquidity surplus, which is noticeable in the use of the deposit facility which the Central Bank grants them.

He said that he expects the monetary policy measures to begin being felt throughout the market faster in time.

* Analysts: The decision of the NBR helps the state raise financing

The general consensus among analysts is that the decision of the NBR is in favor of the state, which can thus get financing easier from banks, as the customers of the commercial banks will hardly feel the effects of this measure.

Economic analyst Florin Cîţu considers that the measure was somehow forcefully brought about by the yield of the government bonds. With commercial banks currently lending to the state at an interest rate of 5.25%/year, it would