Romania Surprises With Larger Rate Hike as Inflation Lingers

Romania unexpectedly pressed ahead with a robust pace of monetary tightening, raising borrowing costs to the highest level in over a decade to combat persistent inflation, Bloomberg News reported. The central bank in Bucharest lifted its benchmark interest rate by 75 basis points to 6.25% on Wednesday, following a similar decision at its last meeting in August. Only five out of 15 economists in a Bloomberg survey predicted the move, while most analysts saw a step of 50 basis points; one predicted a 25 basis-point hike. “According to current assessments, the annual inflation rate will probably stick to an upward path toward year-end, under the impact of supply-side shocks, yet at a visibly slower pace,” Banca Nationala a Romaniei said in a statement. The leu extended its two-day winning streak against the euro, gaining 0.1% after the decision. It traded at 4.9375 per euro at 4:40 p.m. in Bucharest. Read more.