NBR Governor is in favour of cheapening loans, but only if the circumstances are right

National Bank (NBR) governor declares himself in favour of making loans cheaper, but rejects the solution demanded more and more often by the business world, of an aggressive cut to the interest rate on RON-denominated loans, even at the risk of a significant exchange rate depreciation.

"This danger exists not only in Romania, but everywhere around the world - the implementation of hasty solutions, like 'depreciate the exchange rate and cheapen loans'. Don't get me wrong, I am in favour of making loans cheaper. We should think about why the cost of lending is not declining, why banks keep offering deposit interest rates significantly above the NBR rate and above monetary policy rates. Two years ago the same people would explain to us that the problem was the lack of liquidity and called on us to give liquidity. Now, that there is liquidity on the market, they found something else: that the exchange rate has not depreciated," Is`rescu said.
He specified this amid claims that the depreciation of the exchange rate and the reduction of the NBR's monetary policy rate could stimulate the economy, which has been on an unbroken downward trend for over a year.