Romania ends cutting cycle

Romania held its policy rate unchanged at 1.75% this week, thus ending its cutting cycle after cutting rates in seven consecutive meetings.

The government is implementing tax changes that will bring inflation lower, cutting the VAT rate on food from 24% to 9% effective in June. It is considering cutting the overall VAT rate later this year. This will bring inflation lower, says Barclays. At the same time, it is still adjusting energy prices higher towards market rates.