The National Bank of Romania (NBR) has cut its referenceinterest rate again, but its level remains equal to that set whenthe economy was booming. The NBR has cut its key interest rate forthe fifth consecutive time by half a percentage point, to 8% ayear, but bankers continue to ask for patience when it comes tomaking loans in RON cheaper. Loans granted to the private sectorwere on an uninterrupted slide in the first seven months of theyear, then recording a slight rise in August, but only because ofthe high demand for funding in foreign currency. Amid interestrates of 10-13% a year on mortgage loans and of 15-18% a year forthe acquisition of durable goods, loans in RON remain much moreexpensive than those in euros. They compare with interest rates of6-8% a year on euro-denominated mortgage loans, and of 9-13% a yearon consumer loans. "Loans in foreign currency will continue to bemore attractive for clients if the RON/euro exchange rate remainsstable. One should keep in mind that the difference betweenRomania's monetary policy interest rate and that of the euro zonestill amounts to seven percentage points. Achieving convergence ofinterest rates will be a lengthy process, which could be completedin the year before the adoption of the euro," says Sergiu Oprescu,chief executive of Alpha Bank.
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