Romania to Hold Rates as Inflation Set to Ease: Decision Guide

(Bloomberg) — Romania’s central bank is expected to leave borrowing costs unchanged for a third consecutive meeting as it anticipates an easing in the fastest inflation in almost two decades.

Policymakers in Bucharest will hold the benchmark rate at 7% on Wednesday, according to all economists polled in a Bloomberg survey. The bank brought a tightening cycle to a standstill after 11 hikes helped rein in borrowing costs that reached their highest level since 2010.

Price growth is expected to slow to about 7% at the end of this year from 14.5% in March. Still, rate setters at the National Bank of Romania refrained from calling a firm end to the tightening round amid uncertainties triggered by the war in neighboring Ukraine and energy prices.

The bank will also approve an updated inflation forecast, which will be presented in the coming days.

While the European Central Bank has signaled it isn’t done with rate hikes, citing still-high core inflation, policymakers in several eastern European nations, which raised borrowing costs much sooner, are taking a wait-and-see approach to the inflation fight.

“While we expect the decline in headline inflation to continue in the coming months, we nevertheless think that a tight monetary policy stance needs to be maintained for some time as underlying price pressures remain strong and there are concerns over potential fiscal slippages,” said Kevin Daly, a London-based economist at Goldman Sachs Group Inc.

—With assistance from Joel Rinneby.