Estimates by economists regarding the benchmark rate at the end of 2009 vary between seven percent and 8.75 percent. Thus, if the four indicators improve, the central bank could decide to cut the key rate even more. But if the current decline continues and, very importantly, the International Monetary Fund (IMF) believes that this decline was not generated by foreign sources, BNR will cut less in the benchmark rate. In any case, an increase in interest will not be an option for BNR, analysts say.
“I believe that the monetary policy should be tight. If we have a budget deficit wider than official estimates, plus a sharper decline in the economy, the National Bank of Romania will be more restrictive. Thus, the key interest will not be steeply cut, because the leu will be hopeless. I do not believe that there will be many cuts, the central bank can only be cautious,” the Senior Economist within ING Bank Romania, Nicolaie-Alexandru Chidesciuc, told Business Standard.
“My opinion is that the monetary policy will be cautious. There can be no aggressive interest rate cuts, the way the business environment requests,” the Chief Economist of Raiffeisen Bank Romania, Ionut Dumitru, told Business Standard.
