EBRD says Romania's monetary easing will likely be more modest than in the region in 2024

Along with the consensus scenario of strong fiscal stimulus and robust domestic demand, the European Bank for Reconstruction and Development (EBRD) projects strong economic growth of 3.2% this year and 3.4% in 2025 for Romania, under the latest Regional Economic Prospects report published on May 15.

The main vulnerability remains the fiscal position, the EBRD notes, as public spending is expected to increase further on the back of public wage and pension hikes, supporting consumption but risking an even larger deficit in 2024.

Notably, the EBRD expects monetary easing to likely be in Romania more modest than in regional peers in 2024, "considering stronger domestic demand and loose fiscal policy, translating into higher-for-longer inflation."

Romania's central bank, on its May 13 board meeting, put on hold an expected rate cut, citing slightly higher inflationary expectations and higher uncertainty.

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