National Bank of Romania Raises 2026 Inflation Forecast to 6.1%

The National Bank of Romania has raised its annual inflation forecast for the end of 2026 to 6.1%, up from a previous estimate of 5.5%. The central bank now expects inflation to return to its target range of 2.5% (+/-1pp) only by the fourth quarter of 2027.

Governor Mugur Isărescu attributed the upward revision to supply-side shocks, including the US-Iran war, geopolitical tensions in the Middle East, and extreme declines in Danube water levels. These factors, combined with drought and extreme heat, have driven up fuel and energy prices. Despite these pressures, the National Institute of Statistics and Geography reported that July inflation dropped to 8.16% from 10.42% in June.

Isărescu indicated that interest rate cuts will be postponed until inflation falls below the monetary policy rate. The National Bank of Romania also noted a weakening in private consumption and household lending driven by low consumer confidence, although corporate lending grew by approximately 20%. Regarding European integration, Isărescu stated that Romania does not currently meet the criteria for euro adoption and must first reduce its fiscal deficit below 3% of GDP.