NBR’s rate correlation with real economy rates is at best spurious

One theme I keep repeating is that the credit channel is not working in Romania ans will not be working as long as the central bank is focused solely on the exchange rate.
Google Translate
Continue reading “NBR’s rate correlation with real economy rates is at best spurious”

What did the NBR really say yesterday?

On Tuesday I wrote a post showing that NBR’s policy has been too tight in the last three years relative to the economic conditions. I was advocating for an aggressive loosening of broad monetary conditions which includes an aggressive cut in interest rates. A day later the NBR cut the key rate by 0.25% to 6%. I see this as a no-change and so did the market. But few newspaper want to tell you that there is more to this cut than meets the eye.

Then does really anyone think, even the NBR, that a 0.25% cut will lower lending rates? Not me and I am sure not the NBR either. Continue reading “What did the NBR really say yesterday?”