Romania’s central bank is expected to leave its benchmark interest rate unchanged at 6.50% at its July 8 policy meeting, with economists surveyed by Bloomberg unanimously forecasting no change, according to an Erste Group note. The National Bank of Romania (BNR) will publish only its standard press statement after the meeting, making its assessment of macroeconomic developments and policy tone the main focus for investors.<\/p>\n
Erste Group expects the BNR to keep the key rate unchanged until May 2027, arguing that a rate increase is unlikely in an economy operating below potential. While tighter liquidity management through deposit-taking operations could lift effective money market rates above the current 5.50% deposit facility rate, the bank does not see this as its base case, viewing such a move as more likely to reflect concerns over the leu than renewed inflationary pressures.<\/p>\n
The bank forecasts Romania’s annual inflation rate to slow to 5.9% by the end of 2026 from 10.9% in May, supported by favourable base effects during the summer and easing global oil prices following recent movements in Brent crude. Core inflation is expected to decline from 8.5% in May to 5.6% by year-end. However, further depreciation of the Romanian leu remains an upside risk to inflation, although the EUR\/RON exchange rate has recently stabilised within a new trading range.<\/p>\n
Despite weak economic activity, historically low consumer confidence, softer labour market conditions and negative real wage growth, Erste Group expects the BNR to maintain relatively tight monetary conditions to preserve its anti-inflation credibility. The bank sees recession as its baseline scenario for 2026, with downside risks if Romania absorbs less funding than expected under the EU Recovery and Resilience Facility (RRF).<\/p>\n
On the fiscal side, Erste Group considers Romania capable of meeting its 2026 budget deficit target of 6.2% of GDP, supported by solid budget execution in the first five months of the year, realistic budget assumptions and stronger nominal revenues driven by inflation. As a result, the bank expects sovereign credit ratings to remain unchanged this year.<\/p>\n
However, Erste Group warned that the fiscal consolidation programme agreed with the European Commission requires further tightening from 2027 onwards to achieve a primary budget surplus and stabilise public debt. It noted that the collapse of the government has weakened political commitment to these reforms, while the approach of the 2028 election cycle could further reduce the willingness to pursue fiscal consolidation, potentially increasing pressure on monetary policy in the years ahead.<\/p>\n