The National Bank of Romania (BNR) has raised its inflation forecast for the end of 2025 to 4.6%, up from the previously estimated 3.8%, according to Governor Mugur Isărescu during the presentation of the May 2025 Inflation Report. The central bank now sees inflation declining to 3.4% by the end of 2026, compared to the earlier projection of 3.1%.
Isărescu, the world’s longest-serving central bank governor, noted that the central bank will collaborate with the new government to curb inflation through a sustainable and gradual reduction of the public deficit, while avoiding a recession.
While EU inflation dropped to 2.4% in April, Romania’s remained highest at 4.9%, according to Eurostat. National data highlights that the services sector led price increases, posting nearly 7% year-on-year growth in April.
A key driver behind the revised forecast is core inflation, which is now expected to play a greater role over the entire outlook period. Moreover, the planned termination of Romania’s electricity price cap on 1 July 2025 is expected to cause a 15% spike in energy prices, amplifying inflationary pressure through late 2025 and early 2026.
“These adjustments are driven by higher anticipated contributions from core inflation and by the impact of the hike in electricity prices,” the BNR stated. However, the bank also pointed out that favorable trends in fuel, tobacco, alcohol, and volatile food prices will help soften overall inflation dynamics.
Currency Pressures and Structural Uncertainty
The May 2025 report is based on data up to 1 May and does not yet reflect the recent depreciation of the leu. A significant portion of the BNR’s presentation focused on exchange rate dynamics, both current and historical.
Governor Isărescu emphasized the stabilizing effect of capital inflows in offsetting currency pressures from Romania’s trade deficit. He also addressed foreign exchange interventions, confirming media estimates of €6 billion in recent support for the leu, calling them “a bit underestimated, but not far off.” Overall, the BNR’s tone indicates low tolerance for further FX volatility.
The inflation forecast lands in a context of fiscal and political uncertainty, with international institutions warning that failure to implement structural reforms could destabilize Romania’s economy. The European Commission’s Spring Forecast echoes this, projecting slow disinflation through 2025 and highlighting sticky service prices and the removal of energy price caps as inflationary drivers. On the flip side, falling agri-food and international energy prices could ease pressures.
The Commission expects average HICP inflation to dip to around 5% in 2025, with a more visible decline to below 4% in 2026.
Meanwhile, the BNR has kept its key interest rate unchanged at 6.5%, citing persistent inflationary risks and volatile capital markets.