Romania's central bank could hike key interest rate to at least 10.5% in 2008, analyst deems

Romania's Central Bank (BNR) could increase the monetary policy rate to at least 10.5 percent this year, according to Citibank Romania analyst Ilker Domac, which also estimates inflation to reach 6.8 percent at the end of the year.

BNR increased the key interest rate with 0.25 percentage points yesterday, to 10.25 percent per year.

The central bank's most recent estimate regarding the annual inflation in December 2008 was of 6 percent, but BNR chief economist Valentin Lazea said it could be revised upwards in the new three-month report over inflation which will be presented on August 4. 

Domac deems the national currency appreciation when the current account gap is heading towards 14 percent in the gross domestic product (GDP) represents a risky strategy, which could affect the credibility of inflation's target process. 

NewsIn