The analysts expect a 50bp rate hike (the median expectation in the Bloomberg survey) at the monetary board meeting of the National Bank of Romania (BNR) on November 8, with "significant" chances seen by some for a more hawkish 75bp move.

BNR increased the policy interest rate by 75bp at its latest board meeting in October, when it also said that the inflationary outlook had deteriorated.

In any case, analysts see the end of the monetary tightening cycle soon, including for reasons related to the economic slowdown.

"Given the expected profile of inflation and the very likely slowdown or even contraction of the economy in Q4 and Q1, we believe that the end of the monetary policy tightening cycle is near. Whether it is in November at 6.75% (our estimate) or in January 2023 at 7% is probably less relevant to local rates, which tend to correlate more with liquidity conditions than the key rate," said Valentin Tătaru, ING's chief economist, Ziarul Financiar reported.

Ciprian Dascălu, BCR's chief economist, expects the BNR to raise the key interest rate by 50bp at 6.75% with "a significant probability" for a 75bp hike based on the inflation figures having exceeded the BNR's August forecast.

iulian@romania-insider.com

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