Romania to maintain interest rates steady at least till Q1 of the upcoming year without a shadow of a doubt.
Romania's Monetary Policy Remains Steady Amid Inflationary Pressures
Romania's monetary policy rate is expected to remain at 6.5% until at least the first quarter of 2026, as the National Bank of Romania (BNR) prioritizes price stability amid persistent inflationary pressures.
This prediction comes from ING Romania, which also expects the BNR to keep its policy unchanged at its August 8 meeting. The BNR has a monetary board meeting scheduled for this date.
The inflation outlook shows an expected peak in headline inflation between 7.5% and 8.0% by the end of 2025. This surge is largely due to the removal of electricity price caps, VAT hikes, and excise duty increases. Core inflation is projected around 6.5% year-on-year by late 2025.
The inflation surge is largely considered transitory but will remain elevated through most of 2025 and into early 2026. Inflation is forecasted to decline more sharply from the third quarter of 2026 onwards, after the direct effects of these fiscal and energy shocks fade and stronger disinflationary pressures from a widening aggregate demand deficit take hold.
The BNR's decision to keep rates unchanged despite slower economic growth reflects concerns over the inflationary impact of fiscal reforms—including VAT increases—and the liberalisation of electricity prices, which are estimated to add roughly 2 percentage points to inflation.
A first potential rate cut of around 25 basis points is anticipated in early 2026, conditional on visible disinflation and fiscal consolidation progress. However, this easing carries risks such as currency depreciation and renewed inflation pressures.
The yearend target exchange rate for the RON to EUR, according to ING Romania, is RON 5.10. Erste Group forecasts a moderate increase in electricity prices in July, 60% pass-through from VAT hikes, and 100% pass-through of the increase in excise duties.
Recent fiscal changes have added some predictability to economic policy, but they also bring new inflation risks, according to analysts of ING Romania. Erste Group expects the BNR's press release to mention an upward revision in the short-term inflation outlook.
There is a consensus among analysts that the central bank will not change the monetary policy rate until at least the first quarter of 2026. Some easing in the monetary policy rate is possible from the second quarter of 2026 if disinflation is on track.
| Aspect | Projection/Effect | |-------------------------|----------------------------------------------------------------------------------------------------------| | Monetary policy rate | Held steady at 6.5% until at least Q1 2026; potential 25 bps cut early 2026 if inflation subsides | | Headline inflation peak | 7.5–8.0% by end 2025, largely due to VAT hikes, excise increases, and energy price liberalization | | Core inflation | Around 6.5% year-on-year by late 2025 | | Inflation trend | Elevated through 2025/early 2026; significant decline projected starting Q3 2026, returning toward target | | Inflation drivers | Fiscal reforms (VAT, excise duties), energy market liberalisation (electricity price cap removal) | | Risks | Rate cuts could induce RON depreciation and renewed inflation pressures |
The monetary policy maintained by the National Bank of Romania (BNR) is deeply intertwined with the nation's business sector, as the steady rates are primarily aimed at managing price stability amidst persistent inflationary pressures caused by fiscal reforms, VAT hikes, and energy market liberalisation. The expected surge in inflation is also connected to the finance sector, with the removal of electricity price caps, increased excise duties, and the passing-through of VAT hikes impacting businesses significantly.
