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BNR will keep on Wednesday, the interest rate of monetary policy at 10% - analysts

The National Bank of Romania (BNR) will keep the interest rate of monetary policy at the present level of 10% the majority of analysts consider quoted by MEDIAFAX, although they disconsider a reduction of 0.25 percentage points which would not influence the market too much. The BNR board council will meet, on Wednesday, 6 May for the fourth monetary policy meeting of this year. Both the head economist of Raiffeisen Bank Romania, Ionut Dumitru and the head economist of BCR Lucian Anghel expect that BNR keep the present level of the interest rate for monetary policy. " I think there will be a break (BNR). They will choose liquidity injections to bring the interest rates on the market closer to the monetary policy interest rate" Dumitru said.

The analyst explained that the interest rate ROBOR ( for deposits) dropped after the agreement with IMF by approximately four percentage points, from 16% to 12%, so it is not necessary for the moment to reduce the interest rate of monetary policy. "You would rate tune in liquidity to reduce the rates on the market. This moment, BNR makes liquidity injections" Dumitru said. The head economist of BCR does not anticipate a decrease of the interest rate in monetary policy, although he does not disconsider a decision "in small steps" a reduction of 0.25%. Anghel says that such a measure will not influence the market very much.

"The Romanian economy needs a level of monetary policy interest rate reduced, but we have to see in what way it will influence the exchange rate. We have to reach the negotiated objectives of the IMF. More important, it is the way BNR will keep the liquidity in lei to obtain a balance of the exchange rate" Anghel said. On the other hand, the ING Bank Romania economist Nicolaie Chidesciuc believes that the interest rate will be reduced by 0.25 percentage points at 9.75%.

"I think there will a decrease of the interest rate of 0.25 percentage points, as I feel there were signals that the economy is in a stage of pronounced contraction which will continue. BNR must react. Measures must be taken to see the effects towards the end of the year, as the monetary policy acts with a delay. We will see the maximum effect of monetary policy in a year, a year and a half" Chidesciuc said.

He admits that, this reduction is not enough to relaunch the creditation, saying that inflation is very high. "It is not enough, but when inflation is high enough, things get complicated. You have inflation rates, which must be controlled with big interest rates, on the other hand there is also recession". Chidesciuc said. The analyst thinks that it is necessary to have a reduction of the obligatory minimum reserve for deposits in lei made by banks to BNR.

The monetary policy interest rate was 10.25% per year until January, and BNR decided at the beginning of February to operate a first decrease by 0.25 percentage points.

In the meeting at the end of March BNR kept 10% for the interest rate of monetary policy and the rates of minimum reserves applicable to assets in lei and hard currency, but they excluded the hard currency with residual maturity of over two years. For assets in lei, the banks have to constitute a reserve of 18% of the total with BNR and in the case of reserves in hard currency the rate is 40%.

The annual inflation rate in each quarter will be a criterion of performance in the IMF agreement and overcoming by two percentage points the level will bring the adoption of measures as an obligation to continue the programme. The target for 2009 is 4.5% plus/minus a percentage point.

In agreement with IMF performance criteria were established for June and September 2009 when the annual rate of inflation should be within an interval of plus/minus a percentage point against the level established at 6.4%, 5.7% respectively.

BNR fixed for 2009 an inflation target of 3.5% with a variation interval of one percentage point, and estimates the indicator will be placed at 4.5% in December.

 

Sursa: http://www.actmedia.eu

Tags: bnr policy monetary interest inflation rates percentage level points bcr ing

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