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