Romanian central bank set to increase refinancing rate on November 9


It’s not a question of if, but by how much – according to most analysts commenting on the monetary policy decision of the National Bank of Romania on November 9. According to consensus forecasts, the BNR will raise the rate by 50bp to 2%.

There is also a broad consensus on the negative impact of rising interest rates on retail sales, starting in the last quarter of this year. Another open question concerns the central bank’s monetary policy in 2022, when economic growth is expected to slow, making such hawkish measures more costly.

“Romania has been very accommodating until recently but started a tightening cycle in October with a 25bp move. We expect a 50bp increase at the next meeting [on November 9] and 25 bp at each of the next meetings, up to 3.00% ”, according to ING Bank Romania’s chief economist, Valentin Tătaru, quoted by

Raiffeisen Bank chief economist Ionut Dumitru says “we can agree that inflation has gotten out of hand.” This, together with the expected consolidation of the budget deficit, can only lead to an increase in interest rates in general. Dumitru points to the Czech National Bank (CNB), which, for similar reasons (to keep prices under control), decided to increase the refinancing rate by 125 bps, the biggest increase in the cost of credit since 1997.

All central banks in the region have recently made rate hikes, most of them on a larger scale than expected, and Romania is leading the way in terms of inflation – so cannot escape the trend. From 6.3% in September, headline inflation in Romania is expected to accelerate to 7% in November-December.

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