Romania's central bank keeps its key interest rate at 6.5 percent as inflation stays high

Monetary policy rarely makes for dramatic headlines, but the decisions taken by a central bank shape the daily lives of millions of people. In Romania, the latest move by the country's central bank offers a useful snapshot of an economy that is trying to bring high inflation under control without stalling growth.

The National Bank of Romania has once again chosen a cautious path, keeping borrowing costs steady while it waits for price pressures to ease. In this article we look at the decision itself, the current state of inflation, the outlook for the months ahead and what it all means for the wider economy.

Rates held at 6.5 percent

At its August 2026 meeting, the National Bank of Romania decided to keep its benchmark interest rate unchanged at 6.5 percent. The move was widely expected by analysts, who had largely anticipated that the bank would hold steady rather than adjust rates in either direction at this stage.

By keeping the rate at this level, the central bank is maintaining the cost of borrowing for households and businesses across the country. Holding rates steady is often a signal that policymakers want more clarity on where inflation is heading before making any further changes to their stance.

Inflation still in double digits

The backdrop to this decision is an inflation rate that remains uncomfortably high. According to the reported figures, annual inflation slowed to 10.42 percent in June, a level that was broadly in line with the central bank's own forecast for the period, but still firmly in double digit territory.

The bank attributed the slowdown mainly to a sharp decline in the prices of liquid fuels and other fuel costs. This easing was partly offset, however, by higher prices for natural gas and electricity, which continued to push in the opposite direction and kept overall inflation elevated.

A sharp slowdown expected by December

Looking ahead, the central bank expects inflation to fall significantly by the end of the year. Its projections point to a drop to around 6.1 percent in December, a marked improvement compared with the levels seen earlier in the year, even if it would still remain above the desired range.

This expected path is closely tied to specific policy measures. The forecast takes into account the removal of the cap on electricity prices as well as increases in value added tax and excise duties, all of which are set to influence how prices behave in the closing months of the year.

The road back to target

Beyond this year, the central bank sees inflation continuing to ease. Its outlook suggests that price growth could slow to about 3.4 percent by the end of 2027, bringing it back within the bank's target range of 1.5 percent to 3.5 percent after a prolonged period of elevated readings.

A fragile economy

The inflation picture is only part of the story, as the broader economy has also shown signs of weakness. Reported data indicate that economic activity contracted by 1.2 percent in the first quarter of the year, following growth of 0.2 percent in the previous quarter, pointing to a bumpy path.

Despite that setback, the central bank expects economic activity to recover slightly during the second and third quarters. This tentative rebound offers some hope that the slowdown may prove temporary, although the overall environment remains fragile and sensitive to external shocks.

What comes next

For now, the message from the National Bank of Romania is one of patience. By holding rates and watching inflation closely, policymakers are betting that price pressures will fade as forecast, but the coming months will be decisive in showing whether that confidence is justified.