In line with the consensus expectations, the National Bank of Romania (BNR) on January 19 kept the monetary policy rate at 6.5%. With headline inflation close to 10% since August after a supposedly one-off price shock expected to be muted by demand-side drivers, the monetary authority is unanimously expected to cut the rate down as soon as a steady disinflationary trend is identified – not necessarily after the headline inflation eases down in July-August.

However, such a disinflationary trend is not yet visible despite a slight decline in the headline inflation to 9.7% y/y in December from 9.9% y/y in September. The annual adjusted CORE2 inflation rate continued to pick up during Q4, climbing to 8.5% in December from 8.1% in September.

“This reflects the persistent influences stemming from the dynamics of wage costs and the high level of short-term inflation expectations, alongside those coming from the rises in some agri-food commodity prices and the EUR/RON exchange rate, as well as from indirect effects of electricity price hikes,” the BNR report reads.

As Erste Group noted in a research note on BNR’s decision, the relevant policy rate remains the 5.50% deposit facility rate – in the context of the ample liquidity in the banking system, which is expected to persist throughout 2026.

The Austrian financial group expects BNR to operate the first rate cut this year only after a quarterly Inflation Report confirms the disinflation trend. Such reports are expected in February, when the inflation readings will probably not indicate a visible downward trend, and May – when such a cut could be possible.

For end-2026, Erste Research kept its forecast at 3.7% y/y for the headline inflation and 3.8% y/y for core, anticipating a sharp disinflation in August as the impact of recent supply-side shocks fades from the statistical base. By the end of March, the caps on natural gas prices and on markups for certain basic food items are scheduled to expire. 

Under the scenario sketched by the Austrian financial group, these two factors (the natural gas price liberalisation and the lifting of the food pricing regulations) represent the main sources of uncertainty and could introduce upside risks to the year-end projection. 

Among the macroeconomic landscape sketched by the central bank in its report issued along with the monetary policy decision, its expectation for steady economic activity in Q4 stands out. It remains unclear, however, whether BNR means q/q or y/y steady growth – but in both cases, this would mean a significant overall economic growth for the entire year.

“The latest data and analyses point to a stagnation of economic activity for 2025 Q4, in line with previous forecasts, associated with an increase in annual GDP dynamics, amid mixed developments across the aggregate demand components and major sectors,” according to the report.

iulian@romania-insider.com

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