Analysts with both Erste and Raiffeisen banks expect the central bank to continue its monetary easing, following third consecutive rate cuts in the last five months.
However, the upcoming reduction of the central bank’s main interest rate will have a limited impact on the banking and financial markets, because the move is widely anticipated and has been already factored in by the participants, Raiffeisen said in a report Friday.
The Austrian bank forecasts another prudential rate cut of 25 basis points at the May meeting, provided the economic situation in the eurozone doesn’t deteriorate too much.
Erste also believes market players anticipate the new rate cut. The successful 5-year bond issue earlier this week indicates that the investors are comfortable with the lower yields, analysts said.
The Finance Ministry Thursday sold a planned 1 billion lei (EUR228 million) in five years bonds, at an average yield of 6.16% a year, lower than at the previous auction. Book orders amounted to RON2.5 billion.
In addition, investors are also optimistic following the International Monetary Fund’s decision to disburse a new installment of its EUR3.6 loan agreement with Romania, Erste noted.