Business Forum • 16 May, 2025 at 6:05 PM
The Board of the National Bank of Romania (NBR) decided on Friday to maintain the key interest rate at 6.50%, while citing uncertainties regarding the impact of deregulated energy prices on inflation.
Concurrently, the BNR kept the interest rate for the Lombard lending facility at 7.50% per annum and the interest rate for the deposit facility at 5.50% annually.
“Heightened uncertainty surrounds the future trajectory of fiscal and revenue policies, especially given the present domestic political landscape. Factors contributing to this include the budgetary performance in the first quarter and the imperative for fiscal consolidation as outlined in the medium-term budgetary-structural plan agreed with the European Commission, alongside the excessive deficit procedure. According to a cited source, a credible package of fiscal consolidation is of paramount importance. This is not only crucial for facilitating an orderly correction of the external imbalance but also for its impact on the availability and cost of financing for both the public and private sectors, including the property market," according to BNR's latest inflation report.
The central bank sees higher pressure on inflation following the removal of energy price caps for households starting July.
The annual rate of inflation is expected to continue its volatile pattern through to Q3 2025, influenced by base effects and the end of the cap on electricity prices. Subsequently, a four-quarter period of decline is anticipated, albeit along a considerably elevated path compared to previous projections. It is not until Q1 2026 that inflation is forecast to dip marginally below the upper bound of the target range, before stabilising at a relatively consistent level, according to the report.
Romania's inflation stood at 4.85% in April, while the economy stagnated during Q1 2025, according to flash estimates analyzed by the central bank.