Erste analysts: BNR to lower reference interest rate to 5.25 pc


Raiffeisen specialists look for an additional cut to 5 pc on 2 May.

Erste and Raiffeisen analysts estimate that the National Bank of Romania (BNR) will lower the monetary policy interest rate by 0.25 percentage points to 5.25 percent on Thursday, March 29. The estimates were presented on Friday. Erste notes that the success of the Finance Ministry’s issuance of bonds with a three-year maturity last week is due to both the investors’ expectations on the lowering of the monetary policy interest rate and to the fact that the IMF board approved the fourth evaluation report on its agreement with Romania, Mediafax informs. The Public Finance Ministry (MFP) sold last Thursday RON 1 bln worth of bonds with a three-year maturity at a yield of 6.16 per cent. The value of underwritings stood at RON 2.482 bln.Likewise, Erste estimates that the yield that Romania pays for bonds with a five-year maturity will drop from 6.5 per cent now to 6.4 per cent by December. “The decision (our note: central bank to cut the key rate) might have no impact on either interbank interest rates (ROBOR) or yields on government securities. We believe that the current level of yields already incorporates the expected key rate cut. The central bank’s statement following the monetary policy meeting should offer some hints about the next moves in the key rate. We look for an additional cut of 25 bp (to 5 percent), at the following monetary policy meeting on 2 May, provided that things do not deteriorate on the external markets,” said Raiffeisen Bank review.BNR lowered the monetary policy interest rate by 0.5 percentage points early this year during Administrative Council meetings in January and February. The key interest rate is now at a historic low of 5.5 per cent.

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