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August 8, 2022

Impact of ECB decision on Romania: costs of EUR loans to rise

The hike of the European Central Bank (ECB)’s reference interest rate will lead to  more expensive EUR loans, hiking the costs of local banks’ loans in foreign currency, according to a HotNews.ro study. It is impossible to say exactly how much this will add to the monthly instalments paid by those who contracted foreign currency loans, as the price transfer varies from one bank to another, based on models which take into account the interest rate risk. Competition on the market prevents banks from hiking interests, as every lending institution is keeping a close watch on what the other players are doing. In the very short run, we won’t be seeing sudden hikes in the cost of loans for those who contracted loans in euro.

In the medium run, instalments may rise, but this depends, as well, on the evolution of the exchange rate.

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