Romania’s National Bank (BNR) will likely increase the monetary policy rate again today by 0.25 percentage points, to 2.5% per year, to keep inflation under control, according to UniCredit Bank analysts.

Moreover, BNR will likely continue with the monetary policy rate increases in May and June.

The central bank decided to increase the monetary policy rate in January, from 1,75% to 2% and then again in February, from 2% to 2,25%, as a response to the spike in the annual inflation rate, which reached 4.7% in February this year. The monetary policy rate had been kept at the historic low of 1.75% for almost three years, since March 2015.

Central bank governor Mugur Isarescu said last week that the ambitious fiscal relaxation measures led to higher budget and current account deficits, which has put pressure on local prices and the local currency.

UniCredit estimates that the current account deficit will go over 4% of the GDP this year, which will push the EUR/Ron exchange rate close to 4.7 RON.

editor@romania-insider.com