The commercial banks’ chief economists expect no rate cuts on October 8 or by the end of the year. Such a move is seen as possible in February-May next year, while the liquidity management is seen as a possible indirect instrument used by the monetary authority in case of disappointing economic performance, according to analysts surveyed by Cursdeguvenare.ro.
Erste/BCR analysts continue to anticipate the resumption of the interest rate cut cycle in the first quarter of 2026, noting that this decision “largely depends on the evolution of inflation.”
“Should the National Bank of Romania (BNR) determine, with a reasonable degree of confidence by the time of the February Inflation Report, that inflation is on track to return to the target band by the end of 2026, we believe the central bank will proceed with the rate cut. Conversely, if that certainty is lacking, the rate cut is likely to be deferred until the May meeting,” Erste Group’s research note reads.
The Erste Group analysts note the central bank’s expectations for lower market interest rates as soon as this year.
“At the August press conference, the central bank governor […] mentioned that short-term rates, in his opinion, will continue to go down this year as liquidity in the market gradually recovers and risk sentiment regarding Romania becomes more positive,” the analysts stressed.
ING, in a research note, said BNR could actually use the market liquidity to address potential disappointing economic performance.
Despite inflation nearing double digits and real rates staying negative, the National Bank of Romania (BNR) is expected to maintain its cautious stance at its October 8 meeting, prioritising stability amid weakening consumption and uncertain growth prospects, according to ING’s research note.
At this point, ING sees a more short-lived inflationary phase – relative to the previous one – being supported by clear signs of weakening consumption and wage dynamics, coupled with persistently subdued consumer sentiment.
Additionally, ING anticipates a continued easing in global oil prices, while a strong domestic agricultural season should limit the upside potential of food inflation ahead. Altogether, these elements are expected to exert downward pressure on inflation in the near-to-medium term.
“Barring unexpected shocks, we expect the BNR to keep its policy rate at 6.50% until May 2026, after which a gradual easing cycle could begin. By the end of 2026, we expect the policy rate to be at 5.50%. If growth disappoints significantly, the Bank may also amplify its less visible easing by tolerating even higher excess liquidity in the system,” the ING report reads.
iulian@romania-insider.com
(PHoto source: Lcva/Dreamstime.com)
Leave a Reply