Private lending has slowed down, which is good from the point of view of monetary policy, but it has accelerated in foreign currency, says Christian Popa, a member of the Central Committee of the BNR.

Companies rushed to borrow in foreign currency, apparently with two ideas in mind, he says:

1. Interest in euros will always be low

2. The rate will be fixed

“They are both wrong. Interest rates in euros continue to rise. The difference in interest is reduced and the exchange rate is not fixed. Anyone who takes loans in foreign currency should know that there is a currency risk,” explained the representative of the BNR.

He also stated that there was an inflow of capital into Romania, which increased the exchange rate, but this inflow of foreign capital sometimes comes and sometimes goes.

“What do we do when sentiments in international markets change? What are we doing as a country when the investors who come in and finance this deficit would rather leave? There is a risk of deterioration. As investors rush in, panic sets in. Therefore, we have to be careful,” he said.

Inflation is too high to think about lowering the interest rate

It is premature to talk about lowering interest rates, believes Christian Popa.

“Inflation is too high for us to think about cuts, let alone operational cuts. It’s a difficult time, unfortunately, we have no other solutions. We must first return to positive real rates,” stated the deputy of the Central Committee of the BNR.

In his view, getting inflation down to a target where wages are growing at 14% a year is a challenge.

It will be recalled that recently the National Bank of Ukraine decided to keep the key interest rate at the level of 7%.