The National Bank of Romania (NBR) decided to keep its key interest rate unchanged at 6.5% on Monday, extending the steady policy stance maintained since August 2024 and marking the third such decision in 2025.
The move, widely anticipated by analysts, leaves Romania with one of the highest benchmark rates in the EU, as the country navigates heightened global trade tensions and domestic fiscal challenges—just one month before its presidential election re-run.
The deposit facility and lending facility rates were also left unchanged at 5.5% and 7.5%, respectively. Furthermore, the minimum reserve requirement ratios for both leu- and foreign currency-denominated bank liabilities remain steady.
“Heightened uncertainties and risks stem from the future performance of energy and food prices, also given the legislation in the field, but also from the trade policy measures taken by developed economies, with a potential impact on commodity prices, as well as on the international prices of some intermediate and final goods,” the NBR said in its post-meeting statement.
Inflation Pressures and Budget Deficit Weigh on Outlook
After reducing the policy rate from 7% to 6.5% in mid-2024, the central bank has kept a cautious stance. Inflation remains elevated, with February’s rate at 5%—among the highest in the EU. Preliminary data suggests that March inflation may have exceeded the NBR’s 4.6% year-on-year target. Official March figures are set to be released on April 11.
ING Romania’s chief economist, Valentin Tataru, projects average inflation for 2025 at 5.2%, a modest decline from 5.6% in 2024 but still above the 5% rate observed since mid-2024.
Adding further complexity is Romania’s wide fiscal gap. The government targets a 7% budget deficit for 2025, but analysts suggest that additional fiscal consolidation—such as tax increases—may be necessary following the May 4 presidential election.
Analysts See Limited Room for Rate Cuts
While Erste Bank Group anticipates up to three 25 basis point cuts by year-end, it warns that political instability and fiscal uncertainty could limit the scope for monetary easing.
“Weaker growth numbers and market expectations for the ECB rate path could be arguments for the doves. In the decision-making process, these dovish calls are likely to be outweighed by fiscal concerns, increased FX vulnerability due to elevated risk premia and sovereign rating risks, as well as high and mostly upside inflation forecast uncertainties,” Erste noted.
Capital Economics, meanwhile, takes a more hawkish stance:
“We maintain our forecast for the policy rate to remain at its current level throughout this year, which is a more hawkish view than the consensus.”
The next monetary policy meeting is scheduled for May 16, just days after the presidential vote, which could play a key role in shaping the government’s fiscal trajectory—and, in turn, influence monetary policy going forward.
