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Romania Central Bank Hikes Rate By 75 Bps

Romania's central bank raised its benchmark rate by a smaller-than-expected 75 basis points on Friday.

The board of the National Bank of Romania decided to hike the policy rate by 75 basis points to 5.50 percent from 4.75 percent. The bank was expected to raise the rate by 100 basis points.

The bank also raised the interest rate on the lending facility to 6.50 percent from 5.75 percent and that on the deposit facility to 4.50 percent from 3.75 percent.

The bank maintained the existing levels of minimum reserve requirement ratios.

Today's decision to slow the pace of tightening seems to reflect the NBR's view that inflation is being driven mostly by supply-side factors, and its expectation that inflation will peak in the third quarter, Joseph Marlow, an economist at Capital Economics, said.

The economist expects the NBR to proceed with further 75 basis point hikes at its next couple of meetings, and to take rates to 7.25 percent by the end of the year.

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