Romania: Inflation to Reach 8.9% in July - Analysts

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Romania: Inflation to Reach 8.9% in July - Analysts

The National Bank of Romania (BNR) raised the key interest rate by 0.25 percentage points on Tuesday, to 9.75 percent, the Business Standard Daily reports.

This is the seventh consecutive rise in the rate. In the last seven months, BNR raised key interest by almost one third, from 7 percent in September 2007 to 9.75 percent in May 2008. This rise in key interest goes against expectations of most financial market analysts.

The national currency lost 0.5 percent on Tuesday, pushing it down to RON 3.6506/EUR 1, with the decision to raise interest being received by players as a negative sign for the national economy and the market.

Furthermore, analysts again blamed this new increase on inflation, and in fact economists said that inflation could reach a new high in June or July.

''Inflationary pressures are among the main reasons for the increase in the key rate. For instance, we could witness a 10 percent rise in the price of gas in July.

As such, we feel that inflation will reach a high of 8.9 percent in July,'' Nicolaie Chidesciuc, Chief Economist for ING Romania told Business Standard.

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