Romania Holds Interest Rate in October

The National Bank of Romania held its policy rate at 6.5% at its October 2026 meeting, unchanged since August 2024, but implied that uncertainty surrounding the global economic outlook could trigger inflationary pressures. The central bank noted that the recent disinflationary trend in the Romanian economy has persisted, even as the removal of electricity price caps and VAT changes on selected goods triggered base effects. Meanwhile, the surge in oil and gas prices due to the war in the Middle East remained a primary source of inflation risk. Still, evidence of slower economic activity—particularly in household consumption and exports from major industries—prevented a clear hawkish tilt in policy messaging. On top of that, the latest data reflected a slight drop in employment levels.

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 to 6.1% in December 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 to 3.4% by end-2027, returning to the target range of 1.5% to 3.5%.

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.