Romania to Hold Rates as Sticky Inflation Prevents Debate on Cut

uui0a2vn0p1}mkl5hnnkohkg_media_dl_1.png National Bank of Romania, statisArticle content(Bloomberg) — Romania is poised to keep one of the highest interest rates in the European Union as the fight against elevated inflation takes precedence over easing the strain on the recession-hit economy. Sign In or Create an AccountEmail AddressContinueor View more offersArticle contentThe National Bank of Romania will leave the benchmark rate at 6.5% for a 12th meeting on Tuesday, according to all economists in a Bloomberg survey. Borrowing costs have remained at this level for about a year and a half, during which the Black Sea nation went through its worst political crisis since the collapse of communism and is now seeking to reverse years of fiscal slippages. Article contentWe apologize, but this video has failed to load.Try refreshing your browser, ortap here to see other videos from our team.Article contentArticle contentOfficials are expected to approve an updated inflation forecast, with focus on the impact of tax hikes and other fiscal adjustments. The government’s measures, needed to curb the EU’s widest budget deficit, are keeping headline price growth close to 10% even as weak domestic demand pushed the country into a recession at the end of last year. Article contentTop StoriesGet the latest headlines, breaking news and columns.There was an error, please provide a valid email address.Sign UpBy signing up you consent to receive the above newsletter from Postmedia Network Inc.Thanks for signing up!A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againInterested in more newsletters? Browse here.Article contentInflation slowed less than expected in January, with the headline reading dropping only slightly to 9.6%. While seasonally adjusted data indicate persistent stickiness in cost of services, the statistics also revealed “nascent signs of improvement” in underlying price pressures, according to Citigroup Inc’s economist Gultekin Isiklar. Article content“Assuming no significant deviations from our macroeconomic framework, we anticipate the NBR will have the scope to begin an easing cycle in August 2026, lowering the policy rate to 5.75% by the end of that year,” he said in a report.Article contentCentral bank Governor Mugur Isarescu said last year that policymakers will wait for clear evidence that inflation is heading toward the target band of 1.5% to 3.5% before they will consider monetary easing. Article contentArticle contentThe government of Prime Minister Ilie Bolojan has approved a series of fiscal steps, including scrapping of an energy price cap and increasing the value-added tax, which helped curb the budget gap to 7.7% of economic output, from over 9% in 2024. The measures have hurt spending by businesses and people, causing the deepest quarterly economic decline since the pandemic in the October-December period. Article contentWhile more reforms are needed in the coming years to further narrow the budget shortfall, the constant bickering inside the four-party ruling coalition has already delayed other spending cuts and the approval of this year’s budget, which is based on a deficit target of 6.2% of gross domestic product. Article contentTrending Subscriber only. 'We need to wake up': Atlantic Canada a microcosm of the problems facing the rest of the country Subscriber only Economy Canadians Say They'll Buy Cheaper Chinese EVs as Tariffs Drop PMN Business Subscriber only. Donald Trump plans to roll back tariffs on steel and aluminium goods Subscriber only Financial Times Avoid these TFSA and RRSP mistakes to keep the CRA off your back Personal Finance David Rosenberg: Memo to Mark Carney: Don’t bring a butter knife to an economic gun fight Economy Share this article in your social networkCommentsYou must be logged in to join the discussion or read more comments.Create an AccountSign in Join the Conversation Postmedia is committed to maintaining a lively but civil forum for discussion. Please keep comments relevant and respectful. Comments may take up to an hour to appear on the site. You will receive an email if there is a reply to your comment, an update to a thread you follow or if a user you follow comments. Visit our Community Guidelines for more information. Subscriber only. 'We need to wake up': Atlantic Canada a microcosm of the problems facing the rest of the country Subscriber only Economy Canadians Say They'll Buy Cheaper Chinese EVs as Tariffs Drop PMN Business Subscriber only. Donald Trump plans to roll back tariffs on steel and aluminium goods Subscriber only Financial Times Avoid these TFSA and RRSP mistakes to keep the CRA off your back Personal Finance David Rosenberg: Memo to Mark Carney: Don’t bring a butter knife to an economic gun fight Economy