Overnight rates were below the central bank’s rate of 1.75% offered for the deposit facility.
The central bank last week cut its main interest rate by a quarter of a point to 5.75%, following a similar operation in November last year.
“The second rate cut has shifted expectations in the interbank market. Most of the participants estimate the monetary policy easing will continue and this is why the overnight rates declined by more than the 50 basis points shed off by the central bank,” said Ciprian Mihai, head of the forex and derivatives division at Volksbank Romania.
On the other hand, ING Bank analyst Vlad Muscalu said the lower overnight interest rates are the result of interbank operations rather than of the central bank’s rate cut.
Moreover, the public expenses ahead of the holidays in December, which are yet to go through the system, put additional pressure on the interest rates.
“The excess liquidity might be only temporary and is also fueled by the budgetary expenses at the end of 2011,” said Georgiana Constantinescu, analyst with Credit Europe Bank.
However, considering the strong disinflation tendency, the central bank has scope for more rate cuts, which will show into the evolution of interbank rates, she said.