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Saturday, April 30, 2005

National Bank of Romania hopes for lower interest rates

Governor of the National Bank of Romania Mugur Isarescu insisted that commercial banks cut down interest rates on both credits and deposits.

"I hope I'll see 10-12 per cent interest rates this summer already. Romania enters a capital inflow rise period, and we need to absorb this money. Furthermore, high interests attract speculative capitals, which must be avoided," Isarescu stated in a roundtable on the national currency denomination held at the Chamber of Commerce and Industry of the City of Bucharest.

He emphasised that with the capital account deregulation the competition would rise substantially, so that banks "will have no choice" but to cut down interest rates. Attending the seminar, Radu Gratian Ghetea, head of the Romanian Banks Association, did not share this optimism, and stated banks cannot yet afford to operate such substantial interest cuts.

"If by the end of the year interests paid on deposits will reach 8-10 per cent, then banks will be able to grant credits for an average 16-18 per cent interest," Ghetea estimated. The reasons which made banks work with so high interest rates include, according to Ghetea, the significant costs that banks will incur with the delay in the denomination process.

We all hope to see lower interest rates....by the way, I wonder if ING lowered their interest rates for my credit...are they that adaptive?

Posted by Mihai : 4/30/2005 11:28:00 pm