Romanian Ctrl Bk Gov: Interest Rates Will Fall Quickly

“I believe the rates will be adjusted as rapidly as the external deficit. When they come back from their vacations, Romanians will find lower interest rates,” the governor said during Romania Financial Forum seminar organized by MEDIAFAX and the central bank.

He added there are enough reasons to restore the growth of consumption, with all its benefits.

“I don’t see any reason to further encourage lending,” the governor said.

Bolojan: Întărirea flancului estic NATO, de la Marea Baltică la Marea Neagră, o prioritate

23:08

Ilie Bolojan anunță că România nu va dubla cheltuielile de apărare

23:06

The central bank noted Tuesday a significant slowdown in lending to the private sector, especially as regards lending to companies, with the annual dynamics reaching a seven-year low both at aggregate level and broken down by components.

On Tuesday, the central bank cut the key monetary policy rate by 0.5 percentage points to 9% and also lowered the minimum reserve requirements ratios on both Romanian leu- and foreign currency-denominated liabilities.

Romania’s current account deficit tightened 78.9% in the first four months of 2009 to EUR1.18 billion, from almost EUR5.6 billion in the same period a year earlier, due largely to a narrower trade deficit.

The authorities predict the current account gap will narrow to 7.5% of the GDP by the end of 2009, compared with 12.6% of the GDP in 2008.

However, several central bank representatives said recently that the external deficit may be at 6% of the GDP at teh end of year.

On Wednesday, Isarescu said the current account deficit adjustment is excessive.