Interbank interest rate in Romania goes up from all-time low

The interbank interest rate for 3-month loans (ROBOR 3M), the main benchmark for the cost of loans in lei, reversed trend and began to rise again at the end of last week. It increased from 0.92% to 0.96%. However, it could be a short-term tendency, generated by the central bank’s interventions in the market to stop local currency’s depreciation. On January 6, the ROBOR 3M rate dropped under the psychological threshold of 1% per year for the first time. Then, it continued the downtrend, reaching 0.92% on Wednesday, January 13. The drop in the ROBOR is related to the low inflation level and the high market liquidity. The inflation rate turned negative last year, due to the VAT rate cut on food, while the central bank’s monetary policy rate is also at an all-time low of 1.75%. Analysts expect higher interest rates only at the end of the year or starting 2017, as the inflation rate will turn positive again. editor@romania-insider.com