High internal and external concerns put on hold policy rate cuts in Romania

Romanian analysts are unanimous in ruling out any rate cut at the National Bank of Romania (BNR) monetary board meeting on April 7. Still, they expect a 50-75 basis points (bp) cut by the end of the year depending on the future orientation of fiscal policy, the prospects for economic activity, as well as the risks generated by trade protectionism and the position of other central banks.

Romania's central bank cut the monetary policy rate from 7% (where the rate had stayed during the inflationary peak caused by the war in Ukraine) to 6.5% immediately after mid-2024 and has kept it constant since then – while the consumer price inflation has hovered around 5% over the same period. Core inflation has recently decreased to the same 5% level (in February).