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-Chideșciuc, the chief-economist of ING Bank.
Ionuț 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.