Romania's Inflation Expected to Decline and Stabilize by 2026, Says Central Bank Governor

The annual inflation rate in Romania is expected to follow a downward trend throughout 2024 before stabilizing in the upper half of the target range starting in 2026, according to National Bank of Romania (BNR) Governor Mugur Isărescu, CE Report quotes Agerpres

Speaking on Monday, Isărescu noted that while no major inflationary pressures are expected in the first half of the year, fluctuations will occur due to past economic shocks and base effects. He highlighted that indirect tax hikes in early 2024 and reductions in energy and food prices would influence inflation dynamics. However, inflation is projected to remain below 5% and continue declining from summer onwards.

Isărescu also addressed claims that Romania had the highest inflation in the region, emphasizing that, compared to non-Eurozone peers like the Czech Republic, Poland, and Hungary, Romania had the lowest inflation until last year. He acknowledged that the decline in inflation has been slower in Romania but pointed out that, as of January 2025, Poland and Hungary now have higher inflation rates.

Regarding monetary policy, he stressed the importance of financial stability and a cautious approach to interest rate adjustments. While a rate cut is possible, it must be carefully managed to avoid currency depreciation risks.

The BNR's outlook suggests that Romania’s inflation trajectory remains under control, with monetary policy playing a key role in ensuring long-term stability.