National Bank of Romania leaves rates unchanged in August

Hold is in line with expectations: At its meeting on 8 August, the National Bank of Romania (NBR) decided to keep its policy rate at 6.50% for the eighth consecutive meeting, matching market expectations. The rate remains well above its decade pre-pandemic average of around 3.50%.

Exchange rate volatility eases but inflation remains high, driving the hold: The NBR noted that financial markets and the exchange rate stabilized over July as domestic political tensions eased following the presidential elections, reducing the need for a hike to boost FX inflows. That said, a cut was not considered an option given inflation rose above the 1.5–3.5% target in recent months. Moreover, in the coming months, inflation is set to rise well above Central Bank’s previous projections as a result of a higher VAT and excise duties from August and the expiry of the electricity price cap in July.

Monetary policy to remain prudent: The Bank did not provide forward guidance on future monetary policy decisions. The vast majority of our panelists expect the NBR to also stand pat through year-end. The one-off spike in inflation from fiscal consolidation measures is unlikely to justify higher rates, but the Bank will not risk easing too soon while inflation expectations remain fragile. The impact of the fiscal consolidation package, U.S. tariffs and of the conflict in the Middle East on domestic inflation and GDP growth are key factors to monitor. The next meeting is set for 8 October.

Panelist insight: Commenting on the outlook, ING analysts stated: “Our view, therefore, remains unchanged: no cuts until at least the first quarter of 2026, with some easing possible from the second quarter if disinflation is on track. In the second half of 2026, strong base effects and softer demand should bring inflation back towards the 4.0 % area.”

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