The National Bank of Romania announced on Friday that it would keep its policy interest rate at 6.5%, a level it has held for a year and a half and the highest among European Union member states. The decision was in line with expectations from economists surveyed ahead of the meeting.
The central bank said it has sustained borrowing costs at this level while closely observing the effects of a weaker leu, which has faced pressure after capital outflows linked to renewed political instability.
Alongside the rate decision, the bank approved a revised inflation forecast. The updated projections signal stronger inflationary pressure in the second quarter than previously anticipated. The central bank attributed the near-term acceleration to higher fuel costs and to government initiatives that include the liberalization of the gas market and the removal of price caps on basic food items.
Despite the projected Q2 uptick, the bank expects a marked downward correction in inflation during the third quarter and anticipates that inflation will return to the target range beginning in July next year.
The central bank also flagged domestic political uncertainty as a material risk. "Heightened uncertainties are nevertheless associated, in the current domestic political environment, with potential future measures to continue budget consolidation beyond this year," the institution said in a statement.
Governor Mugur Isarescu is scheduled to present the newly adopted forecast on May 19. The presentation will provide further detail on the path the bank expects inflation and monetary policy to follow.
By holding the key rate steady, the central bank maintained an elevated borrowing cost backdrop as policymakers weigh inflation dynamics, currency movements, and the impact of recent government policy changes. The decision was unanimous with market expectations and comes amid a broader economic context the bank described as including double-digit inflation and a deepening recession.
Further commentary and the full set of projections will be available with the governor's presentation next week.