Romania’s National Bank – BNR has revised its inflation forecast for the end of 2026 upward to 3.9%, from 3.7% previously, and anticipates that it will reach 2.7% by the end of 2027, according to data presented on Wednesday, February 18, by governor Mugur Isărescu. According to the central bank head, Romania will see “a collapse of inflation” this year.
Isǎrescu emphasized that almost the entire jump in inflation in the summer of 2025 comes from energy and natural gas.
“We also had disinflationary influences in the autumn. Volatile prices helped us; fuel prices did not rise, they had a positive period, and vegetables, fruits, and eggs also helped us. The data is conclusive in this respect, but the impact could only partially offset the other influence because supply-side shocks also worsened inflation expectations,” said Mugur Isărescu, cited by ProTV.
Isărescu argued that the National Bank missed the inflation target for four years because of extraordinary conditions.
“We had a pandemic with all the measures that were taken, a war at the border with all its consequences, and an energy crisis with a major impact on prices. And here, in addition to other countries, there was an extended election year. In fact, it was more than a year. It was almost a year and a half. And practically a political crisis,” he said.
In the coming period, however, inflation will subside, according to BNR.
“It simply goes, in a few months, towards 3%, from 9%. It is a correction. And regarding what I said before, it is not something inexplicable because we forecast that monthly inflation in the upcoming period will follow the same trajectory, 0.3%, 0.4% per month, which means around 4% annually. And we reach 3% and enter toward the end of the year and the beginning of the next year within the fluctuation range,” stated Mugur Isărescu in a press conference.
However, according to the longtime central bank head, demand has decreased and will continue to decrease.
“Falling household consumption is socially painful and impacts political stability. We need political stability both to avoid a recession in 2026 and to continue disinflation. New loans also contribute to declining household consumption. It will probably recover gradually because public investments also involve people, salaries, and spending. So gradually, consumption demand will increase on a solid, sustainable basis,” Isărescu further explained.
The official noted that the fiscal measures adopted by the government in the past months are the basis of the fiscal consolidation expected by creditors. The measures ensured “ensured financing of the budget deficit, maintained the country’s rating, and allowed Romania access to international capital markets for borrowing.”
The stabilization “was achieved, but predictably, the fiscal adjustment caused inherent costs in terms of economic growth,” the BNR governor added.
BNR recently decided to keep the policy rate at 6.5%, in line with expectations.
(Photo source: Inquam Photos | George Calin)
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