The National Bank of Romania held its policy rate at 6.50% and kept the lending facility rate at 7.50% and the deposit facility rate at 5.50%. Minimum reserve requirement ratios for credit institutions’ leu and foreign currency liabilities were also unchanged. The decision balances a sharp recent decline in inflation against expectations that price growth will accelerate through the end of 2026. Annual inflation fell to 6.17% in August from 10.42% in June, largely because the effects of the previous year’s electricity price cap removal and indirect tax increases dropped out of the comparison. Adjusted CORE2 inflation declined to 6.2% from 8.3% over the same period. However, higher fuel, energy and other commodity prices, severe drought and movements in the leu exchange rate are expected to push inflation upward through year-end. Over a longer horizon, weaker aggregate demand and continued fiscal correction should generate stronger disinflationary pressure. Economic activity stagnated in the second quarter after contracting 0.1% in the first quarter. A quarter-over-quarter recovery is indicated for the third quarter, partly supported by agriculture, although annual growth is expected to deteriorate. The inflation and growth outlook remains exposed to domestic political and fiscal uncertainty, the Middle East conflict, the energy crisis and associated financing and exchange-rate pressures. Minutes of the meeting will be released on Oct. 20, and the next monetary policy meeting is scheduled for Nov. 12.
National Bank of Romania holds policy rate at 6.50% as inflation is expected to rise through year-end
The National Bank of Romania held its policy rate at 6.50%, with its lending and deposit facility rates unchanged at 7.50% and 5.50%, respectively. Inflation fell to 6.17% in August from 10.42% in June, but higher energy and commodity prices and exchange-rate developments are expected to drive it upward through year-end. Longer-term disinflation should be supported by weak demand and continued fiscal correction.