“If the key rate gets lower and some of the market players refrain from driving the deposit rates higher, we could see some scope for lower interest rates on loans. However, this cannot happen overnight. This is a lengthy process,” Steven van Groningen said.
Speaking at a conference organized by Ziarul Financiar, van Groningen said the recent measure of the central bank to cut interest rates on its standing facilities has a small impact on the interbank market.
Moreover, cutting the interest rates on loans depends on a number of additional factors, such as inflation or market demand, which remains weak, van Groningen said.
Romania’s central bank recently narrowed the corridor around the monetary policy rate for the interest rates on its standing facilities to +/- 3 percentage points, from +/- 4 percentage points previously to temper interest rate volatility on the money and banking markets.
The decision should send a signal to commercial lenders to reduce loan rates, central bank governor Mugur Isarescu said.