April 2 (SeeNews) - Romania's central bank BNR is likely to increase its key rate by 0.25% for a third time this year, to 2.50%, at its monetary policy meeting on April 4, as inflation is expected to pick up, analysts said on Monday.
"We expect the BNR to deliver a third 0.25pp key rate hike to 2.50%, as inflation continues to rise quickly and was probably close to 5% in March, up from 4.7% in February," UniCredit Bank analysts said in a weekly analysis. Furthermore, they expect BNR to hike the key rate on its monetary policy meetings scheduled on May 7 and July 4.
UniCredit estimates that annual inflation will peak slightly above 5% in the second quarter, hovering close to 5% for most of the third quarter before falling towards the 3.5% upper range of the targeted interval due to base effects.
Romania's annual consumer price inflation quickened to 4.7% in February from 4.3% in January. In February, BNR increased its 2018 inflation forecast to 3.5% from 3.2%.
For their part, ING Bank analysts said that with the high February inflation, there are few arguments for the BNR to take a pause in the hiking cycle.
"We expect the NBR to raise the key rate by 25bp, and continue to balance higher key rates to contain inflation expectations and limited transmission of the hikes into the cost of credit by leaving liquidity unsterilized," ING analysts said in a global market research report.
ING analysts see CPI reaching a peak of 4.8% in the second quarter and only start to print levels below 4% in the last quarter of the year, with a stabilization over the medium term close to the upper bound of the BNR’s target interval.
On February 7, BNR increased its monetary policy rate to 2.25% from 2.0%, its second rate hike in as many months.
(1 euro=4.6548 lei)