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December 4, 2022

Erste: BNR set to reduce key interest rate to 3.25 pc

Chances are high that inflation might drop to 2.4 percent till the end of the year and this trend as well as the standstill in the economy crediting will make the strategists of the National Bank of Romania to reduce the key interest rate to 3.25 percent. The event will occur this quarter according to a report of Erste Group Research.
“With inflation balanced at all-time minimum and the lower rate of economic growth due to a slow crediting, the signs are that our monetary policy (of the central bank, editor’s note) might relent by cutting the key interest rate of the National Bank,” reads the report.
“The local demand has yet to recover. Investments had a negative impact on the GDP over the past six quarters and evidence is still required to prove consumption is back on track,” reads Dumitru Dulgheru, senior analyst for Erste Group Research, author of the quoted report.
The monetary market still suffers from an excess of liquidity which reminds that money does not go to crediting as banks would rather preserve their interests at retail loans virtually unchanged.
“Crediting towards the private sector is blocked in the red zone. Until now, the credits in domestic currency have failed to grow fast enough to adjust the foreign currency loans,” reads the Erste report.

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