Stiri	Stiri afaceri	Stiri companii	Evenimente de afaceri

Key-interest rate will continue to go down, BNR adviser says

The Central Bank (BNR) will continue to cut the key-interest rate at a similar pace to the one followed so far, possibly stepped up under the current conditions, Lucian Croitoru (photo), adviser to Central Bank Governor Mugur Isarescu, stated yesterday, according to Mediafax.

At a debate organised by ‘Ziarul Financiar' and streamed live on the website of the publication, he said Romania had registered a disinflationary gap for a few months, which should ‘massively pull down' inflation. However, he continued, there is a ‘very powerful' inertial component acting in the opposite direction.

He also believes there is no real competition in Romania, which helps prices remain relatively high. As for the economic crisis in Romania, Croitoru says ‘it came from abroad', without meaning that it couldn't have been also generated from within.

‘Capital flows have been beneficial for the Romanian economy, for example they have produced exports, but they also have created some unsustainable tendencies such as bank credits. The private debt had reached a significant share too fast and the exchange rate was overvalued,' Croitoru added.

‘A large wave of capital formed at global level after 2002 when the last great crisis ended. Capital inflows flooded the US, the UK, France and other developed states and they lasted from 2002 to 2008. This is a cyclical development,' the BNR official stated.

He explained that during the capital flow the GDP outgrows its potential, the credits grow faster, the exchange rate appreciates, the central bank reserves grow and the assets become very expensive.

‘After the sudden stop (of the flow - editor's note), the exchange rate tends to depreciate, the GDP registers massive drops, the current account significantly adjusts towards the desired direction and the price of assets falls. These are givens for us. It is too difficult for a country to change these things,' Croitoru explained.

Croitoru added that the Central Bank had ‘convinced everyone' that an agreement with the IMF would make the difference between disaster and what we now have in Romania.

‘The upturn of the Romanian economy depends a lot on the re-launch of the world economy. At the same time, the re-launch of the world economy is not enough to be certain that Romanian economy will also redress, because the latter is also conditioned on macro-economic policies,' said the BNR official.

On the other hand, Deloitte Romania President George Mucibabici expects crisis effects to continue to be experience at all ‘levels', but also said that the cost of financing is not among the most important things in an undertaking. ‘The banks are commercial companies with private capital; their role in the economy is not to subsidize the losses registered in the real sector. The banking system should not subsidize the losses generated by the crisis, the state has to do that,' Mucibabici stated within the ‘Ziarul Financiar' debate.

Sursa: http://www.nineoclock.ro

Tags: lsquo capital economy romania continue croitoru bnr

Articole similare