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Investing.com -- Romania’s central bank maintained its benchmark interest rate at 6.50% on Tuesday, in line with analyst expectations, while warning that recent tax increases will drive inflation higher in the near term.
The decision to keep the rate steady at 6.50% matched forecasts from all analysts in a recent poll. Romania’s central bank, which aims to keep inflation within a target range of 1.5%-3.5%, noted that higher value added tax and excise duties implemented in August will push annual inflation "considerably higher" in the short term compared to previous projections.
Despite the near-term inflation concerns, the bank indicated that these tax measures could have positive longer-term effects by reducing the budget deficit and eventually putting downward pressure on inflation.
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