The local arm of Raiffeisen Bank announced later in the day a 325bps cut in the interest rate for uncollateralised consumer loans to 9.75%.
The steps seem to indicate the banks' commitment to generate new business after they focused on building a deposit base in the previous years. The deposit to loan ratio reached 101% at the end of 2013 for non-government customers, and 91% for total customers [government included]. As interest rates have decreased, the households' trend of building bank deposits has faded and the propensity to spend seems to have increased recently.
The central bank has gradually cut the monetary policy interest rate down to 3.5% and announced no further cuts in the near future. Headline inflation is projected to hit 3.5% at the end of the year and remain in the 2.5% +/-1pps in the coming couple of years.
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