Romania’s central bank to certainly hike refinancing rate: but how high

“We believe the National Bank of Romania (BNR) will hike the refinancing rate by 50bpm, but we thought the same last time,” said Ionut Dumitru, chief economist at Raiffeisen Bank Romania.

With the headline inflation at 8% and expected to enter the double-digit area after the Government takes its hand off the energy prices in April, ING expressed similar expectations for a 50bp rate hike (to 2.5%) at the February 9 monetary board meeting. But even a possible 50bp hike would not put Romania’s monetary authority at par with its peers in Hungary (2.9%) or Poland (2.75%).

“Core inflation reached 4.7% and should peak in the 5.5%-6.0% range in the second quarter. A return of headline or core inflation to the BNR’s 1.5%-3.5% target range might not happen in the coming two years,” an ING research note reads.

In contrast, Adrian Codârlaşu, vice-president of CFA Romania Society, believes that the BNR will keep its “prudent policy” of raising the key interest rate and hike the rate by only 25bp, Ziarul Financiar reported.

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