The persistent decline of non-governmental lending and RON's appreciation trend against the euro have convinced the NBR to cut the key rate by another 0.5% to 7% per annum, as most analysts had already anticipated.
The monetary policy rate therefore reverts to the all-time low registered in the summer of 2007, when the market was seeing massive inflows of foreign currency and a record appreciation of the RON.
The central bank did not go for a greater relaxation of the monetary policy, citing "the persistent uncertainties related to the international environment evolution, of the capital flows, of controlled and volatile prices."
At the same time, it did not see fit to feed additional cash into the market by reducing the level of reserves that banks are required to keep with the NBR.
Rates on the interbank monetary market had gone below 7% again before the NBR announced the key rate cut. The last few weeks have seen highly volatile interbank interest rates, with the fluctuation interval ranging between 3.5% and 9% for short maturities. The key rate cut means that banks will be able to get overnight financing from the NBR at a lower cost, 11% per annum.
Most analysts deem yesterday's decision of NBR's Board of Governors as a "firm step" or as "an important jolt" for increasingly cheaper RON loans.
On the other hand, BRD and ING's economists believe that the cut has already been incorporated by the market, and the effect will be gradual, so that the maximum impact will only be reached one year from now. Even with the cuts operated by some banks lately, interests on RON loans are still higher than 10%, and the annualised percentage rate still will not go below 20%.
"It's too early to talk about one-digit interests for RON loans. It is largely dependent on whether the number of insolvency cases goes down or not, on whether we have a
