NBR has paved the way for new rises in interest rates for RON deposits and loans after it raised the monetary policy rate for a fifth time yesterday, to 9.75%, which surprised many analysts.
Since last autumn, increases in the monetary policy rate now amount to 2.75%.
The local market interpreted the decision as a sign of worsening forecasts concerning inflation and higher risks, even though the bank continues to increase its rate in 0.25% steps. On the other hand, foreign analysts, such as those at American Citibank, continue to believe that the 10% mark will be reached on June 26.
NBR's Board of Governors yesterday said that the NBR anticipated "the inflationary rate will temporarily exceed the upper limit of the fluctuation interval around the target over the next few months." It also said that the risks threatening forecasts "can be made worse by the increased uncertainty that affects the international economic environment."
After the recent rate increase in March, commercial banks were quick to react and upped the interest on deposits, amid fears of a decline in available cash as well as on credits.
The interest rates might move again given that the NBR has decided to raise the rates at which it takes or grants emergency money to banks. Starting today, the banks left with cash that use the deposit facility see a 5.75% annual interest rate, 3.75% more than at present, while those in dire need of cash can borrow from NBR in exchange for an annual interest rate of 13.75%, 1.75% higher than the previous rate. The two interests will now be on a symmetric interval of plus/minus 4% from the monetary policy rate. In addition, to be able to intervene more effectively on the market, NBR lowered the maturity term for standard operations to attract deposits from banks from two weeks to one. Last but not least, it also increased the penalty interest rate for banks that do not set up their minimal mandatory reserves in RON, from 18% to 20.5% per annum. NBR's Board of Governors believes that the measures will consolidate the monetary policy rate's role as a signal and will reduce the volatility of rates on the monetary market.
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