BUCHAREST, Feb. 7 (Xinhua) -- The Board of the National Bank of Romania (BNR) announced Wednesday to raise its benchmark interest rate to 2.25 percent starting Thursday, marking the second quarter-point increase since the beginning of the year, so as to contain inflation.
"Today's measure aims to strangle inflation which is now largely driven by some prices and the price of crude oil," said BNR governor Mugur Isarescu.
The hike, anticipated by financial market analysts -- as they consider the inflationary risks are moving "to the upside", may be followed by other uplifts this year until the benchmark rate of BNR would reach the 3 percent level.
"Given that Romanian interest rates must offer adequate compensation for the rising inflation and keeping in mind that inflationary risks are to the upside, we believe that another four 0.25 percent hikes to the key rate in 2018 would be needed to stabilize inflation and inflation expectations within the target range over the next two years," noted Unicredit's senior economist Anca Negrescu in a report to investors.
"The central bank will raise the benchmark rates, as the inflation may probably reach a 5 percent level in the first half of this year, but it will act carefully in the future as 62 percent of Romanian companies borrowed money in national currency, up from 38 percent in 2008," Iancu Guda, director at Coface Romania, told Xinhua.
Isarescu's estimations confirm the analysts' bets, as he warned that "until the Easter we'll see the prices going up", but he added that the real risks are the changing of anticipations.
Romania followed on the steps of Czech's central bank, which has already hiked its benchmark rate last week. Other CEE (Central and Eastern Europe) central banks chose for the moment a policy of expectation, observed Isarescu.
"Poland and Hungary said they did not raise their interest rates, although they have high inflation. Perhaps they launch a better signal and they assume that the European inflation, on which we depend, is low, and it will have a positive impact on our economies. We believe that by the end of this year we will bring inflation back into our goal level," commented the BNR's governor.
The BNR decided on Jan. 8 to hike the key rate for the first time in almost a decade. The bank lowered the benchmark rate over 20 times from 10.25 percent in January 2009 to 1.75 percent in May 2015, and the rate remained unchanged for more than two years until Jan. 8.
A single purchase
