Romania cenbank unanimously voted to raise key rate to 3.75%

BUCHAREST (Reuters) – Romania’s central bank board unanimously voted to raise the benchmark interest rate by a bigger than expected 75 basis points to 3.75% at its May 10 meeting as it expected sharply higher inflation, minutes published on Friday showed.

The bank delivered its sixth consecutive rate hike in May saying it expected supply-side shocks amplified by the war in Ukraine to keep inflation into double digits until the second half of 2023.

With its headline rate the lowest among central and eastern European peers and a rising current account deficit, the bank’s board members said risks to the Romanian leu remained elevated.

“They referred to the size of the external imbalance and the uncertainties associated with budget consolidation amid the war in Ukraine, to the Fed’s and the ECB’s prospective monetary policy stances, as well as to the significant local interest rate differential vis-a-vis countries in the region,” the minutes said.

(Reporting by Luiza Ilie)