Most analysts exclude a direct influence on lending interest rates, adding rates may decline once foreign pressure eases.
Romania’s central bank Thursday lowered its main interest rate by 25 basis points to 5.75% a year, the second rate cut after a similar move in November, while keeping minimum requirements unchanged.
“The central bank’s decision was anticipated by the market and it did not have any impact on the (leu) exchange rate. The effects on the interest rates are compensated by the competition between banks for household and corporate savings. The central bank could stimulate a decrease in lending costs through a more relaxed monetary policy, but also by offering banks longer-term liquidity,” said Dan Bucsa, chief economist within UniCredit-Tiriac Bank.
In his turn, BRD chief economist Florian Libocor does not expect noticeable effects in the market, adding the central bank’s decision has a reduced reach and won’t be felt in lending.
“There will not be an impact on the exchange rates, because Romania is already paying the highest yields in the region, aside from Hungary. The slash is insignificant and it will not influence interest rates. Reductions in the cost of lending may only be seen after another cut of at least half of percentage point,” Libocor said.
Financial analyst Florin Citu believes the central bank’s decision will not have an impact on the market, since liquidity is fragile in the system and the Lombard rate is very high, at 9.75%, reflecting the maximum interest risk for extreme shocks.
Citu believes that in the short run the central bank’s reduction of the key rate will be shown in slightly higher gains for banks after repo operations unfolded by the central bank on Finance Ministry bonds.