Romania’s central bank, the National Bank of Romania (BNR), kept its key monetary policy rate unchanged at 6.50% on July 8, in line with market expectations, citing "very high uncertainties" surrounding the economic outlook and stressing the need for a balanced macroeconomic policy mix to preserve stability.

The National Bank of Romania also maintained the deposit facility rate at 5.50% and the lending facility rate at 7.50%.

"The balanced mix of macroeconomic policies and the implementation of structural reforms, including through the use of European funds, to stimulate long-term growth potential are essential for macroeconomic stability and strengthening the capacity of the Romanian economy to cope with adverse developments," the central bank said.

Economists broadly expect the BNR to leave interest rates unchanged for almost another year. Erste Group forecasts the key rate will remain at 6.50% until May 2027, when easing inflation could allow the central bank to begin cutting rates.

"Rate hikes appear unlikely in a weak economy operating with a negative output gap," Erste said. The bank added that tighter liquidity management through deposit-taking operations could lift effective market rates above the current 5.50% deposit facility rate, although this would more likely reflect exchange-rate concerns than renewed inflationary pressures.

Erste expects Romania's headline inflation to slow to 5.9% y/y by the end of 2026, with CORE2 inflation easing to 5.6%. The analysts identified further depreciation of the leu as the main upside risk to the inflation outlook, although they noted that the EUR/RON exchange rate has recently stabilised within a new trading range.

The BNR acknowledged that inflation remains elevated. Annual consumer price inflation rose to 10.85% in May from 9.87% in March, while adjusted CORE2 inflation increased to 8.5% from 8.2%, reflecting second-round effects from higher fuel prices, currency depreciation and persistently high short-term inflation expectations.

The central bank expects inflation to decline over the coming quarters, supported by favourable base effects, particularly in the third quarter, and by fiscal consolidation measures. It projects headline inflation at 5.5% at the end of 2026 before slowing further to 2.9% by the end of 2027.

On economic activity, the BNR said recent data point to a modest recovery in the second quarter after GDP contracted by 1.9% quarter-on-quarter in the final quarter of 2025 and stagnated in the first quarter of 2026. The expected improvement would be accompanied by stronger annual growth, supported by mixed developments across domestic demand components and major sectors of the economy.