THE REFERENCE INTEREST RATE AND IT’S ROLE IN ECONOMY

Coralia Emilia Popa
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Coralia Emilia Popa: University of Craiova Faculty of Economics and Business Administration

Annals of University of Craiova - Economic Sciences Series, 2012, vol. 3, issue 40, 165-170

Abstract: The National Bank of Romania (NBR) as a monetary authority sends the objectives of the forward policy through some monetary indicators, among them detaching the reference interest rate, as the main element in determining the direction in which the rates applied by the other banking institutions involved in the economic life, will evolve. The interest rate has successfully assumed the role of an adjuster of the relationship between supply and demand on the credit market. The influence of reference interest rate is not only exerted on banks, the entire economical world revolves around its upward or downward evolution. The economy, through its main components: credit, savings, investment, GDP, exchange rate, export and import of goods and services, inflation etc., is tempered or brightened by the burst or fear that NBR expresses through the reference interest rate. The purpose of this article is to highlight the importance that reference interest rate has on economic life, concerned both as a whole and through its main elements. At the same time, I will try to present the evolution of interest rate in the last years, an evolution correlated with the main macroeconomic indicators. The oscillations of inter and intra bank interest rates exert a very important impact on both credit and savings, no matter whether we have a natural person or a legal entity. Consequently, the interest rate changes determine and establish the stages of economic development.

Keywords: reference interest rate; The National Bank of Romania; monetary (search for similar items in EconPapers)
JEL-codes: E43 E52 (search for similar items in EconPapers)
Date: 2012
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