FX.co ★ Romania Keeps Interest Rate Unchanged as Expected

The National Bank of Romania has maintained its benchmark interest rate at 6.5% for the seventh consecutive meeting as of July 8, continuing its effort to curb inflationary pressures. In May, headline inflation surged to 5.45%, marking the highest rate since April 2024. This figure significantly exceeds the NBR's target of 2.5% ±1 percentage point, propelled largely by increasing food and energy costs. Economically, GDP growth decelerated to a mere 0.3% year-on-year in the first quarter, mainly due to sluggish net exports. However, the labor market showed promising signs, with the unemployment rate decreasing in April and May after reaching a peak of 6% in the first quarter. Looking forward, the NBR warned of a potential rise in inflation over the short term, attributing this to upcoming fiscal measures such as the end of electricity price caps and proposed increases in VAT and excise duties starting in August. Policymakers also reaffirmed their cautious approach amid ongoing geopolitical tensions and uncertainties in global trade.