Romania Holds Rate as Inflation Surges on Tax Hikes

The National Bank of Romania held its benchmark interest rate steady at 6.50% in its first policy meeting of 2026, marking the eleventh consecutive pause and in line with market expectations. Headline inflation slightly eased to 9.7% in December 2025 but remains far above the 1.5–3.5% target, with core inflation continuing to rise. GDP growth rebounded to 1.7% year-on-year in Q3, supported by investment, private consumption, and net exports, though domestic demand remains weak and Q4 is expected to stagnate. The labor market stayed fragile: unemployment rose to 6.1% in Q3 and fell slightly in October–November, while employment continued to decline and wage growth moderated. Financial conditions improved as interbank rates and bond yields fell, the leu strengthened, and credit growth slowed. Looking ahead, inflation is expected to gradually decline, influenced by fiscal consolidation, European fund absorption, structural reforms, and global monetary and geopolitical developments.

The National Bank of Romania kept its benchmark rate at 6.50% on November 12, marking the tenth consecutive pause and matching expectations. The move aims to ensure price stability while supporting growth. Inflation edged up to 9.88% in September from 9.85% in August, as higher fuel, energy, and non-food prices offset declines in food and tobacco. The NBR expects inflation to ease gradually but remain above earlier forecasts due to the end of the electricity price cap and recent tax hikes. The labor market showed slight job losses and a small dip in unemployment to around 6%, while wage growth stayed strong. Policymakers highlighted fiscal uncertainty under the EU’s structural plan and external risks tied to trade tensions, the war in Ukraine, and EU investment priorities. The bank underscored the need to absorb EU funds to offset fiscal tightening and support reforms.

The National Bank of Romania kept its benchmark interest rate at 6.50% in its October 8, 2025 meeting, marking the ninth consecutive pause in line with expectations. Inflation jumped to 9.85% in August from 5.66% in June, driven by the removal of the electricity price cap and higher VAT and excise taxes introduced on August 1. The bank expects inflation to peak in Q3 before easing, though pressures persist from supply shocks and high labor costs. Employment dipped slightly in June–July, but unemployment edged down to 6%, and hiring intentions improved modestly in September, especially in trade. Wage growth slowed but remained elevated. The NBR said fiscal tightening should aid disinflation by cooling demand and narrowing external imbalances, while warning of risks from fiscal adjustments, global trade uncertainty, and geopolitical tensions.