Romania's more hawkish monetary policy seen as still growth-supportive

The National Bank of Romania (BNR) will hike the refinancing rate by 25bp to 1.75% in November and may have to increase it up to 2.5%-3.0% until the end of 2022 as the inflation will exceed significantly the current forecast of the monetary authority, according to experts quoted by Economica.net.

Based on existing data as of now, we estimate that the annual inflation rate will reach 7.3% in December 2021 and 4.5% in December 2022, well above the BNR's targets, according to Ionuţ Dumitru, chief economist of Raiffeisen Bank. The Austrian bank expects a gradual increase of the monetary policy to 3% at the end of 2022.

Even so, the interest rates will remain negative in real terms, with a positive impact on the economic growth, underlines Adrian Codîrlaşu, vice president of CFA Romania. "We are still facing real negative interest rates, which should stimulate the economy. Therefore, I do not think that the interest rate increase cycle started by the BNR will have a significant [negative] impact on the real economy," says Codîrlaşu.

(Photo: Octav Ganea/ Inquam Photos)