A fall in the annual inflation rate, which has also reached a historical minimum of 2.6% last month, also motivated this decision. For the time being, the effects are yet to manifest themselves, however. The reason, according to National Bank governor Mugur Isarescu, has to do with the sovereign debt crisis on the European market. At the same time, though, this move has allowed the Romanian state to borrow money cheaper on the domestic market. Here is Governor Isarescu with more details:

“Speaking of the macroeconomic situation, we can see obvious signals being sent down the ladder from monetary policy-makers to the state bond market, and certain delays in the banking system. We believe that this delay will be made up for in the most part, and that over the coming period a large part of this move will be reflected on the credit market, at the level of commercial banks. I will add another thing I’ve said repeatedly: unfortunately for us, for Romania, this cycle of reducing the reference interest rate comes at a very tense time in Europe, generally, at the economic and financial level, but particularly at the level of commercial banks.”

However, a fall in the reference interest rate is no longer enough for banks to drop their interest rates, according to the chairman of the Romanian Banking Association, Radu Gratian Ghetea. In his opinion, the central bank should focus on lowering the obligatory minimum reserves. The decision makers at the National Bank have not lowered the minimum reserves required from lending institutions. They remain set at 15% of liabilities in lei and 20% of liabilities in hard currency.

Right after the announcement was made that the reference interest rate had been dropped, the exchange rate increased on the interbanking market, because a lower reference interest rate makes the Leu less attractive. According to analysts, ordinary bank customers will not really feel much of an impact as a result of this decision.