ING: NBR will cut main rate to 6.5%

ING analysts said the central bank was likely to continue easing the monetary policy in its next rate-setting session scheduled for March 29. The central bank is expected to cut the main rate by 50 basis points to 6.5%.

“We expect the next rate-setting session to mark another 50-basis points rate cut to 6.5% - a level that has already been factored in by the market, if we look at the current level of interest rates, even if the median forecast points to a 25 basis points cut”, ING said in a report Friday.

The National Bank of Romania has already cut the monetary policy rate for the one-week repo operations two times year to date, from 8% to 7.5% in January and to 7% in February.

According to ING, the leu remains an attractive currency for carry trades, as long as interests are still high in Romania compared to other EU countries. However, NBR’s further rate cuts and Federal Reserve’s potential exit strategies could outweigh this leverage over the next 3-6 months.

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