JPMorgan : BNR could drop the key interest up to 5% this year

BNR could reduce the key interest down to 5% this year, in the context where leu is appreciated, together with the other currencies in the region, calms down the inflation and allows a quick relaxation of the monetary policy, a JPMorgan report shows. "We expect a continuation of the tendency to appreciate the currencies in the region" Miroslav Plojhar, economist JPMorgan said.
 
"This slows down inflation. The risk for this perspective is the reduction of interest to make them more significant in Romania and Hungary and Poland and the Czech Republic to start later to harshen the monetary policy" he said, NewsIn informs.

For Romania and Hungary, the basic scenario for JPMorgan indicated a reduction of the key interest down to 5.5% per year but the American bank does not exclude a bigger relaxation of interest down to 5% in Romania, even under the level of Hungary.

The leu, forint, zlot and Czech kron are to appreciated this year, in the context where the current accounts of the countries improve. At the same time, the level of exchange rate does not reflect the growth potential in the region, Plojhar said. The currencies of these four countries benefit from a better fiscal situation by comparison to Greece, Portugal , Ireland or Spain.

In this context, the central banks did not choose to decide about the evolution of the exchange rate according to the study made by the bank.

The region benefits from strict fiscal policies, required by the agreements with IMF by Romania and Hungary, which reduces the pressures on the central banks to strengthen monetary policy or to limit the level of relaxation.

In the eurozone, the average of the public debt will be this year 84% of GDP reaching even 125% in Greece, the European Commission estimates. In the emerging Europe only Hungary will overcome the limit of 60% imposed by EU with a debt of 79.8% of GDP. At the same time, the deficit in the euro zone will be on average of 6.9% of GDP, double to the limit imposed by EU.