In light of the refused inflation forecast published by the National Bank of Romania (BNR), Romanian bank BCR expects the central bank to hike the refinancing rate by 25bp in November and by some 25-50bp in 2022 "depending on the fiscal conduct." 

BNR shifted upward the projected inflation trajectory, which is now expected to hit 5.6% at the end of this year (+1.5pp compared to May forecast) and 3.4% (+0.4pp) at the end of 2022.

"The change in the forecast had to be accompanied by a firm speech from the BNR governor, Mugur Isărescu," according to BCR chief economist Ciprian Dascălu, quoted by daily Bursa.

Isărescu stated, on August 9, that the cycle of decreasing interest rates in Romania has stopped, and about the tightening of monetary policy will take place orderly: first, the purchases of assets will be phased out, then excess liquidity will be sterilised, and the liquidity will be put under stricter control.

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andrei@romania-insider.com