Romania Interest Rate

Romania’s central bank kept its key interest rate steady at 6.5% for the sixth straight meeting on May 16, 2025, amid intense political uncertainty. The decision, in line with expectations, came after a far-right candidate’s strong showing in the presidential election led to the prime minister's resignation, sparking capital outflows and market volatility. The central bank cited "extremely high uncertainty" surrounding inflation forecasts and noted that the recent outflows had disrupted liquidity, raised interest rates, and pressured the currency. It stressed the urgent need for a credible fiscal consolidation plan to manage Romania's large external deficit and ensure stable financing for both public and private sectors. Meanwhile, inflation is expected to remain volatile until Q3 2025, influenced by base effects and the end of electricity price caps. The bank sees inflation falling below the 3.5% upper target band only in early 2026, following a slower path than previously forecast.