Romania:
Hold had been expected by markets: At its meeting on 19 January, the National Bank of Romania decided to keep the NBR reference rate at 6.50%, with other monetary policy settings also unchanged. This marked the 11th consecutive pause, in line with market expectations.
Inflation outlook underpins hold: The main factor behind the Central Bank’s decision was inflation, which eased slightly to 9.7% in December from a peak of 9.9% in September but remained well above the 1.5–3.5% target. Meanwhile, core inflation continued to rise in December. Price pressures picked up in the second half of the year, bolstered by the expiration of the electricity price cap scheme and tax hikes aimed at reducing the government’s budget deficit. As such, the Bank took a wait-and-see attitude, likely considering it premature to cut rates, while a weak economy prevented a hike.
Rate cuts to resume in 2026: The National Bank of Romania is expected to begin easing monetary policy as early as Q2, to boost domestic economic activity as inflation falls due to the fading effect of the expired electricity price cap, as well as higher VAT and excise duty rates. Our Consensus projects rates to end 2026 roughly 100 basis points lower than current levels.
The Bank will reconvene on 17 February.