Inflation outburst will force the NBR to hike the interest rate, analysts believe
The National Bank is likely to raise the benchmark interest rate
for RON in November or early next year at the latest from the
current level of 6.25% per annum, because of food rising prices,
which will upset its inflation projection, even though the economy
will not exit recession by then, financial analysts consider.
In September, the 7% price increase for potatoes, 4% for edible oil
and 1% for bread drove monthly inflation to 0.56%, considerably
above analyst expectations, of 0.4%. Thus, annual inflation climbed
to 7.8%, a two-year high, compared with the 7.6% level forecast by
analysts.
"Most importantly, this inflation increase is no longer triggered
by the VAT hike, as it happened in July and August, but by the
pressure of food prices, which are climbing after summer floods,
but also as foodstuffs became more expensive internationally in the
previous months. This happens despite falling consumption demand,"
says Nicolae Alexandru-Chideşciuc, the chief-economist of ING
Bank.
Ionuţ Dumitru, chief-economist of Raiffeisen Bank, says the NBR
absolutely has no room currently for monetary policy easing, and
there are risks of an interest rate hike.