Amid a macroeconomic picture thwarted by the international crisis fallout, NBR's Board of Governors will meet on January 6 to discuss on a possible move to change the monetary policy interest rate and the level of the minimum compulsory reserves banks have to set up.
The central bank will have on its table data pointing to a rapid industrial output decline, rising unemployment rate, dwindling budgetary revenues and speedy RON decline.
In the face of Western recession, the main national banks of Central Europe ended 2008 with interest rate cuts in a bid to boost lending and put a brake on economic downturn.
Central bankers in the region are no longer trying to protect national currencies through high interest rates, agreeing to significant declines.
The National Bank of Romania now has the highest interest rate in the EU, at 10.25%, despite inflation having dropped to 6.74% in November.
Domestic banks' analysts believe the central bank will not rush to cut the key interest rate as long as this is again out of sync with the market, where interest rates are considerably higher (13-14%), so that it no longer has much relevance.
BCR expects the rate to stay at 10.25% in March, too, with the rate to go down to 9.5% no sooner than June and end the year at 8.5%. RBS, too, believes the interest rate will stand at 8.5%, while ING sees it at 9%. Raiffeisen Bank analysts anticipate a first cut for March, when the interest rate would go down to 10%, staying at this level through September.
It remains to be seen how the NBR reacts to economic growth deterioration signals and worsening forecasts for 2009, indicating a GDP increase of only 1-3%, from over 8% in 2008.
Analysts believe there are more chances for a new reduction of the level of minimum compulsory reserves for RON, to boost cash available for loans, on January 6.
As regards the minimum foreign currency reserves, a cut would also mean a drop in NBR's foreign currency reserves, an undesirable situation given the depreciation pressure the domestic currency is under.
Last but not least, NBR's Board of Governors could reassess the conditions for retail loan granting, after the amount of RON loans for consumers in November posted the second monthly nominal drop in a row.
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