Romania Keeps the EU's Highest Interest Rate as Inflation Slowly Cools

The National Bank of Romania has left its benchmark interest rate unchanged at 6.5 percent, keeping in place the highest key rate anywhere in the European Union. The decision reflects a cautious approach from policymakers, who are waiting for clearer evidence that inflation is coming down before they consider easing monetary policy.

A rate held steady for nearly two years

The 6.5 percent level has now been in place for almost two years, maintained across a long run of consecutive policy meetings. Rather than move quickly to loosen conditions, the central bank has chosen continuity, signalling that it wants firm proof that price growth is genuinely under control before changing course.

That patience has turned Romania into something of an outlier within the bloc. Its key rate stands as the highest among European Union members, a position that underlines both the strength of domestic price pressures and the determination of policymakers to protect the credibility they have built over the years.

Inflation on a slow path down

According to the central bank's own projections, consumer price inflation was expected to sit around 5.7 percent in September, before easing to roughly 5.5 percent by the end of 2026 and then falling to about 2.9 percent a year later. The forecasts point to a gradual rather than sudden return toward more comfortable levels.

A sharper slowdown was anticipated during the third quarter of the year. The bank has linked this to the fading effects of expired electricity price caps and earlier tax increases, whose impact on the annual comparison finally begins to drop out of the figures, allowing the headline rate to move lower.

Even so, inflation in Romania remains well above the levels seen across most of the euro area. That gap helps explain why policymakers have been reluctant to start cutting rates, preferring to wait until the downward trend looks firmly established rather than risk reigniting price pressures.

Risks that keep the bank cautious

A weaker Romanian leu is one of the main risks flagged by the bank. Any further depreciation of the currency would raise the cost of imported goods and feed back into inflation, although officials have noted that the euro to leu exchange rate has recently steadied within a new trading range.

Political uncertainty has added another layer of difficulty. Deadlock at the national level has delayed reforms that the economy needs, complicating the outlook and making the central bank's task harder. Against this backdrop, holding rates high has looked to policymakers like the more prudent option.

Governor Isarescu's message

Governor Mugur Isarescu has remained central to communicating the bank's thinking, presenting refreshed inflation projections and stressing the importance of keeping monetary conditions tight. The core message is that the institution's anti-inflation credibility must be preserved, even when the wider economic climate is challenging.

By holding borrowing costs at an elevated level, the bank aims to anchor expectations across the economy. The goal is to prevent a situation in which households and companies simply assume that high inflation is permanent and adjust their spending, saving and pricing behaviour accordingly, which would make the problem harder to solve.

What it means for households and markets

For borrowers, the high rate means credit stays expensive, weighing on new loans and mortgages across the country. For savers, it offers stronger returns on bank deposits, though whether those returns translate into real gains depends heavily on how quickly inflation continues to fall in the months ahead.

Financial markets, including the Bucharest Stock Exchange, tend to follow these decisions closely. The path of interest rates shapes borrowing costs, corporate financing and investor appetite, so every signal from the central bank about the timing of future moves is examined for clues about where the economy is heading.

The outlook from here

The broad direction seems clear enough, with inflation expected to keep drifting lower over the coming year. What remains open is the timing of any first rate cut, which the bank has been careful not to promise. For now, the National Bank of Romania appears content to wait, keeping the highest rate in the European Union in place until it is convinced that price stability is firmly within reach.