Romania Holds Interest Rate as Expected

The National Bank of Romania kept its key policy rate unchanged at 6.5% in August 2026, as widely expected. Annual inflation slowed to 10.42% in June, in line with the central bank’s forecast, mainly due to a sharp decline in LFO and fuel prices, partly offset by higher natural gas and electricity costs. Meanwhile, economic activity contracted 1.2% in Q1, following 0.2% growth in the previous quarter, reflecting weaker household spending and a negative contribution from changes in inventories. The NBR expects activity to recover slightly in Q2 and Q3, amid mixed developments across domestic demand components and economic sectors. Inflation is projected to fall sharply following the removal of the electricity price cap and increases in VAT and excise duties. After some volatility in Q4 2026, inflation is expected to resume a gradual decline, returning to the target range by end-2027.

The National Bank of Romania kept its key policy rate unchanged at 6.5% in June 2026, as expected, citing persistent uncertainties and geopolitical risks. Headline inflation rose to 10.85% in May, reaching its highest level since April 2023, driven by higher natural gas and fuel prices, as well as increased rents for state-owned housing. Economic activity is estimated to have contracted 1.2% in Q1 2026, following 0.2% growth in Q4 2025, as household consumption weakened and investment growth slowed. Looking ahead, the outlook remains dependent on Middle East developments, although economic activity is expected to recover slightly in Q2 amid changes in aggregate demand and key sectors. Inflation is projected to ease significantly in Q3 2026 following the removal of the electricity price cap. Future policy decisions will focus on maintaining price stability and supporting sustainable economic growth.

The National Bank of Romania held its benchmark interest rate unchanged at 6.50% in May 2026, as expected, citing high uncertainty from energy markets, fiscal consolidation and geopolitical tensions. In April 2026, inflation accelerated further to 10.71% from 9.9% in March, driven by higher gas, fuel and regulated prices, alongside oil price gains, base effects and rising rents for state housing. HICP inflation also increased to 9.5%. Looking ahead, inflation is expected to rise further in Q2 2026 due to energy shocks, before falling later in the year and gradually returning to target in 2027, assuming continued disinflation from weaker demand and fiscal tightening.