Banks can't stop buying bonds. Why?

Where will the interests on banking deposits or T-bills go in two years? Many people would like to know the answer to this question to decide how to invest their money. The one thing everyone knows for sure now is that banks can’t stop buying bonds maturing in two years at a 14.2% yearly interest rate, even though the interest has been visibly falling over the last seven months.
This practically means that bankers are expecting interests to plunge over the next two years, which makes it worth the effort of investing the money now and have it blocked at an annual yield of 14.2%.
While the two-year maturity bonds bore nearly 26% interest a year last May, the smaller financing needs of the state budget deficit and the liquidity surplus on the market have later pushed the interest down to half. The two-year maturity bonds offered during the last tender in 2002 came with only 14.2% in annual interest, which is also the interest the State paid to those buying T-bills on January 2. Still, the bonds are subject to a buying frenzy.
The demand of the banks on Tuesday reached about 2,700bn ROL (some $80 million), whilst the Finance Ministry was offering only 700bn ROL.
Experts in the field say this trend is a result of the still too high interests, given the projections for the main macroeconomic indicators. “If considering they target 13%-14% inflation for this year and this indicator is very likely to go down, in 2004, as do the interests in their turn, at least for now, we can understand the decision to invest the money now and buy bonds bearing 14.2% interest,” Anca Codirla, senior dealer with Raiffeisen Bank Romania said. According to Codirla, the rate cuts will soon slow down.
“The overall interests paid by the Finance Ministry last year went down from 35% to 16%-17%. This can no longer happen this year, because the targeted inflation cut is not as radical as last year’s (about 12% i.e.),” Anca Codirla says.