Romania keeps policy rate at 6.5% in line with expectations
<p>In line with expectations, Romania’s central bank BNR on April 7 kept the monetary policy rate at 6.5% despite slower economic growth, citing internal and external risks.</p>

<p>The latest data and analyses point to a pronounced slowdown in quarter-on-quarter economic growth in 2025 Q1, implying an annual GDP growth rate relatively similar to that in the previous quarter, amid divergent developments in aggregate demand components as well as in major sectors, according to the central bank’s press release.</p>

<p>Heightened uncertainties and risks stem from the future performance of energy and food prices, given the legislation in the field, but also from the trade policy measures taken by developed economies, with a potential impact on commodity prices, as well as on the international prices of some intermediate and final goods.</p>

<p>High uncertainties are associated with the future fiscal and income policy stance, given, on the one hand, the presumed impact of the corrective fiscal and budgetary measures implemented or adopted so far, as well as the budget execution in the first two months of the year, and on the other hand, the budget consolidation requirement according to the National Medium-Term Fiscal-Structural Plan agreed with the European Commission and to the excessive deficit procedure.</p>

<p>Labor market conditions and wage dynamics in the economy also remain a source of uncertainties and risks.</p>

<p>Heightened uncertainties and risks to the outlook for economic activity, implicitly the medium-term inflation developments, arise from the external environment, given the protracted war in Ukraine and the situation in the Middle East, but especially amid the trade policy of the US administration and the retaliatory measures taken by other countries, affecting the developments in the global economy and in international trade.</p>

<p>Furthermore, the absorption and use of EU funds, mainly those under the Next Generation EU programme, are conditional on fulfilling strict milestones and targets. However, they are essential for carrying out the necessary structural reforms, including energy transition, as well as for counterbalancing, at least in part, the contractionary impact exerted by geopolitical conflicts and budget consolidation.</p>

<p><em>iulian@romania-insider.com</em></p>

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