The National Bank of Romania will maintain its restrictive monetary policy begun last year over the next few months, as well, keeping the intervention interest on the monetary market at 21.25% a year until the end of the second quarter at least.
At the same time, it will be very careful to the development of the foreign currency lending, given that lending in ROL will become more expensive and the depreciation of the ROL against the main currencies will be lower this year, while the appetite for foreign currency funding could resurface this year. This is, in brief, the message conveyed by Teodor Buftea, head of NBR’s monetary policy department.
“The monetary policy has already been consolidated a great deal and we have no intention of making it more lenient. Or at least no sooner than the second quarter. One of the effects of this policy started last year was that the interests on the banking deposits rose slightly and practically stimulated savings, an indicator that had been following a downward trend,” Teodor Buftea said.
The much too sharp rate cut operated by both the NBR and the Finance Ministry in the first half of 2003 rapidly reverberated across the banking system, seeing banks lower interests paid on deposits to real negative levels. The “deregulation” of the lending, and the lack of proper rewards for banking deposits induced a steep decline in savings last year. A boom, on the other hand, was registered for the lending, and especially consumer lending, which rose in real terms by more than 260% last year alone.
Buftea says that since interests will stay high, as the inflation gradually shrinks, the lending in ROL will become more expensive. Add a slower depreciation of the domestic currency, as anticipated for this year – according to the message conveyed by NBR Governor Mugur Isarescu repeatedly until now to this and the road to an increase in the demand for foreign currency loans is open.
“The foreign currency component of the non-governmental lending may see a higher increase this year. The rise in the ROL lending price, against an inflationary decline along with maintaining interests high and a slower depreciation of the ROL against the benchmark currencies may direct the attention towards foreign currency again. We will keep our eyes wide open, though, ” the NBR official says. oana.nuta@zf.ro