Minutes of the monetary policy meeting of the National Bank of Romania Board on 10 August 2026

  Published on: 21.08.2026   The National Bank of Romania Board members present at the meeting: Mugur Isarescu, Chairman of the Board and Governor of the National Bank of Romania; Leonardo Badea, Vice Chairman of the Board and First Deputy Governor of the National Bank of Romania; Florin Georgescu, Board member and Deputy Governor of the National Bank of Romania; Cosmin Marinescu, Board member and Deputy Governor of the National Bank of Romania; Aura-Gabriela Socol, Board member; Roberta-Alma Anastase, Board member; Csaba Bálint, Board member; Cristian Popa, Board member.   During the meeting, the Board discussed and adopted the monetary policy decisions, based on the data on and analyses of recent macroeconomic developments and the medium-term outlook submitted by the specialised departments, as well as on other available domestic and external information.   Looking at the recent developments in inflation, Board members showed that the 12-month inflation rate had entered a downward path in June 2026, in line with expectations, going down to 10.42 percent from 10.85 percent in May, but had visibly remained above the 9.87 percent level recorded in the closing month of Q1, given the significant increases, over this period, in the dynamics of energy, fuel and administered prices, under the impact of base effects and the rise in oil prices, as well as following a notable hike in rents for state-owned housing.   At the same time, the annual adjusted CORE2 inflation rate had seen a halt in the slow downward trend it had embarked on at the onset of 2026, rising to 8.3 percent in June 2026 from 8.2 percent in March. That had occurred as the further disinflation in the processed food segment had been more than offset, in terms of impact, by the increases in the growth rates of the non-food sub-components, especially that of the services sub-group, which was significantly larger than the decline that component had recorded in the previous quarter, Board members remarked.   Following the assessment, it was concluded that the upward influences on core inflation had come mainly from the indirect effects of costlier fuels and from the increases in the EUR/RON exchange rate and in the dynamics of some import prices, also amid high short-term inflation expectations, while the moderately downward influences had stemmed primarily from lower prices of some agri-food commodities and, to a small extent, from weaker consumer demand.   During the discussions, Board members referred to the slight pick-up in the annual dynamics of industrial producer prices for consumer goods in 2026 Q2 after the marked fall in Q1 and, particularly, to the high short-term inflation expectations of firms and consumers, which had continued to go up in 2026 Q2 overall or had only marginally decreased, but had seen significant downward corrections in July versus the previous three months. In the same period, financial analysts’ longer-term inflation expectations had remained in the upper half of the variation band of the target, with small fluctuations, whereas the consumer purchasing power had continued to deteriorate in the first two months of Q2, given the change in household income following a downward trend and the annual inflation rate entering the double-digit territory, Board members emphasised.   As for the cyclical position of the economy, Board members pointed out that the new provisional statistical data had reconfirmed the standstill in economic activity in 2026 Q1, after the 1.9 percent drop in 2025 Q4, which implied a moderate widening of the aggregate demand deficit over that period, relatively in line with expectations. Moreover, the contraction by 1.2 percent in the economic activity in 2026 Q1 versus the same year-earlier period had been reconfirmed, following the 0.2 percent growth posted in 2025 Q4, Board members underlined. They noted that the major driver behind the decline had been the considerably larger negative contribution of the change in inventories, to which had added the contractionary effects exerted by the slightly stronger decrease in household consumption.   At the same time, the annual growth in gross fixed capital formation had slowed down sharply, solely on account of the decline in the public sector, while net exports had halved their expansionary impact in 2026 Q1, as the annual change of exports of goods and services, in terms of volume, had seen its positive differential versus that of imports narrow significantly, recording a more pronounced decrease compared to the previous quarter. Consequently, over that period, the trade deficit had reported a lower contraction in annual terms, whereas the current account deficit had posted a faster year-on-year decline amid the improvement in the evolution of income balances, Board members remarked.   Turning to the near-term outlook, Board members agreed that the economic activity would likely record a more modest recovery in 2026 Q2 and Q3 as a whole than in the previous forecasts, implying that the aggregate demand deficit would go down to lower values than those previously anticipated for that period.   It was noted that the outlook was associated with an improvement in the annual performance of the economy in 2026 Q2, amid the re-acceleration of gross fixed capital formation, but also with a small contribution from private consumption, as suggested by the available high-frequency indicators. However, the expansionary impact of net exports was likely to decline again, as the annual change in exports of goods and services had continued to narrow its positive gap against that in imports in April-May 2026, reporting a relatively slower, albeit significant increase from 2026 Q1. Against that background, the trade deficit had seen a halt in its downward adjustment compared to the same year-earlier period, whereas the decline in current account deficit had slowed down only mildly, given the marked improvement in the evolution of income balances, Board members underlined.   Looking at the labour market, Board members showed that the incoming data pointed to a near-halt in labour market easing in 2026 Q2, indicating a slower drop in the number of employees economy-wide in April-May 2026 versus the previous quarter, in parallel with a slight decrease in the ILO unemployment rate in 2026 Q2 as a whole, from the 6.4 percent average it had gone up to in Q1. Furthermore, the July surveys sent out mixed signals on the near-term outlook, reflecting a rebound in very short-term employment intentions after two quarters of sizeable contractions, but also a stronger narrowing to a 6-year low in the labour shortage reported by companies, Board members remarked.   At the same time, it was noted that the annual growth rate of nominal gross wage had continued to decline in April-May 2026, on the back of developments in the private sector, to reach historically low levels, while the annual change in unit labour costs in industry had witnessed a jump in May, thus posting a renewed pick-up in the first two months of 2026 Q2 overall.   Also in that context, the uncertainties surrounding the future dynamics of labour costs remained elevated, Board members deemed, referring to the recent levels of inflation and inflation expectations, as well as to the hike in the gross minimum wage economy-wide as of 1 July 2026, alongside the persistent mismatches between labour demand and supply in certain sectors, which could amplify again private sector wage pressures.   It was agreed, however, that opposite influences would emerge from the heightened uncertainties and costs generated domestically and internationally by geopolitical conflicts and the energy shock, as well as from fiscal consolidation measures, including the wage and employment policy measures in the public sector, affecting consumer demand and companies’ incomes and investments. Moreover, similar influences could further stem from global trade tensions, inter alia amid the new US trade policy measures, as well as from the structural changes in certain markets, but also from the increased resort by employers to non-EU workers and the expansion of automation and digitalisation, several Board members emphasised.   Turning to financial conditions, Board members pointed out that the main interbank money market rates had further followed a linear path in July 2026, while medium- and long-term yields on government securities had halted their downward adjustment at the beginning of the month and subsequently embarked on a slowly upward, albeit winding course amid the renewed escalation of the Middle East conflict.   It was observed that the EUR/RON exchange rate had stayed in July at the higher values it had returned to in the last 10-day period of May, posting slightly lower swings, inter alia amid the action of domestic seasonal factors, and the USD/RON rate had quasi-stabilised at the higher readings seen in the previous month, in correlation with the US currency’s movements on international financial markets.   Risks to the leu’s exchange rate remained high, Board members deemed, citing the fluctuations in global risk aversion amid the Middle East conflict and the major central banks’ likely monetary policy stance, but especially the still wide twin deficits, as well as the uncertainties generated by the domestic political situation.   Against that background, the importance of political and government stability was repeatedly underlined, as well as the need to continue the fiscal adjustment in line with the National Medium-Term Fiscal-Structural Plan agreed with the European Commission and the requirement to take up EU funds under the NRRP, which were essential also from the perspective of the implications for the external position of the economy and the sovereign risk premium, implicitly for the cost of public and private sector financing.   In their assessment, Board members also noted that the annual pace of increase of credit to the private sector had stepped up visibly in June, climbing to 8.4 percent against 7.7 percent in May, as the rate of change of the leu-denominated component had increased markedly, after five quarters of steadily falling, mainly as a result of the step-up in lending to non-financial corporations, whereas that of foreign currency credit further advanced rather swiftly, on the back of developments in loans to non-monetary financial institutions. Conversely, slight opposite influences stemmed from the further slow decline in the dynamics of household credit, this time solely on account of the growth rate of leu-denominated consumer credit and other loans, some Board members pointed out.   As for future macroeconomic developments, Board members pointed out that the annual inflation rate would witness a substantial downward correction in 2026 Q3, amid the fading-out of the direct effects from the expiry of the electricity price capping scheme and the increases in VAT rates and excise duties, but would fluctuate slightly in 2026 Q4 and then resume its decline on a higher trajectory than that highlighted in the May 2026 forecast, returning within the variation band of the target at end-2027, two quarters later than in the previous projection. Specifically, according to the new projections, the annual inflation rate was seen at 6.1 percent in December 2026 – compared to the previously-forecasted 5.5 percent –, then sliding to 3.4 percent in December 2027 and 2.8 percent in June 2028, versus 2.9 percent and 2.7 percent anticipated in May 2026 for end-2027 and March 2028, Board members underlined.   The outlook for a gradual decline in the annual inflation rate starting in 2027 Q1, as well as the relatively higher levels where it was expected to run, especially in the middle segment of the forecast horizon, were largely attributable to supply-side factors, Board members remarked. It was noted that the action of these factors would become strongly disinflationary in 2026 Q3, also as a result of the decrease in the prices of fruit and vegetables, but was anticipated to worsen somewhat in the coming months – mainly due to the increase in telecommunications prices and mandatory motor third-party liability insurance tariffs, as well as in the price of natural gas –, before turning disinflationary again, amid the emergence of base effects associated with the price hikes generated this year by the energy shock, especially in the fuel segment.   At the same time, it was agreed that the balance of risks induced by supply-side factors remained tilted to the upside, in the short run at least, given mainly the developments in electricity and food prices, amid this year’s severe drought, as well as the path of crude oil prices and other commodity prices in the context of the lingering Middle East conflict, with implications also for the international prices of some intermediate and final goods.   Underlying factors were expected to exert mild disinflationary pressures in the near future, Board members concluded, referring to the noticeable size of the aggregate demand deficit in 2026 Q1 and the prospects of its further widening over the next two quarters, as well as to the time lag needed for the disinflationary effects of the negative output gap and of the weaker consumer demand to become manifest – especially amid the increased persistence of core inflation –, as well as to the wage cost dynamics in the private sector likely remaining temporarily on an upward trend.   Underlying disinflationary pressures would, however, be increasingly manifest in a somewhat more distant perspective, Board members argued, adding that the aggregate demand deficit was expected to widen until 2026 Q3, thus declining to lower-than-previously-anticipated levels – amid the budgetary correction, but also the global energy crisis – and to gradually narrow subsequently. At the same time, private consumption was expected to post a sharper decline in 2026 than previously envisaged, implying a further improvement in the composition of aggregate demand this year, with a larger contribution of investment, with implications also for the developments in potential GDP in the future, some Board members pointed out.   However, the annual dynamics of core inflation would continue to be affected in the short term by the indirect effects of higher fuel and natural gas prices for non-household consumers and would be influenced by the increase in telecommunications prices and mandatory motor third-party liability insurance tariffs, as well as by the removal of the cap on the mark-up on basic food products, Board members noted. In addition, import price dynamics were likely to rise further in the run-up to mid-2027, causing, together with the movements in the EUR/RON exchange rate, additional inflationary effects domestically.   Conversely, the dynamics of this component would reflect in 2026 Q3 the substantial disinflationary base effects associated with the increases in VAT rates and excise duties in August 2025, whereas short-term inflation expectations would undergo a wide downward adjustment in that period and would subsequently follow a gradually downward path, Board members underlined. At the same time, disinflationary contributions were expected, primarily in 2027, from the base effects associated with the price hikes induced in the current year by the global energy shock.   Under the circumstances, the annual adjusted CORE2 inflation rate was anticipated to record a more modest downward correction in 2026 Q3 compared with the prior forecast, and to go down at a relatively slower pace on a higher-than-previously-envisaged path, falling marginally below the mid-point of the target at the end of the projection horizon. Specifically, it was seen dropping to 5.4 percent in December 2026 and to 2.3 percent in June 2028, versus the 4.8 percent and 2.2 percent previously anticipated for end-2026 and March 2028.   Looking at the future cyclical position of the economy, Board members showed that economic activity had strongly reflected, in 2026 Q2 as well, the effects of budgetary consolidation and high inflation dynamics, but would recover thereafter, particularly in 2027, amid the use of EU funds, especially those under the NRRP, and the improvement in the performance of some agricultural sub-sectors in 2026, as well as in the context of the de-escalation of the Middle East conflict and the revival of external demand. Therefore, the aggregate demand deficit would probably continue to widen in 2026 Q2 and Q3, declining to lower values than in the previous projections, and to gradually narrow subsequently, remaining sizeable at the end of the forecast horizon, Board members underlined.   At the same time, household consumption was anticipated to decline somewhat more visibly in the current year as a whole compared to the previous forecasts, but would make again the majority contribution to GDP dynamics in 2027, while gross fixed capital formation would remain the main factor supporting economic activity in 2026 and would probably contribute significantly to the recovery of the economy next year, amid the absorption and use of a higher amount of EU funds under the multiannual financial framework, with crowding-in effects on the private sector as well, Board members remarked.   It was noted that net exports were anticipated to exert, however, a marginally contractionary impact in both 2026 and 2027, implying a somewhat more modest correction of the current account deficit-to-GDP ratio this year and only a slightly larger one in 2027 than previously foreseen. The indicator would thus stay considerably above European standards over the projection horizon, remaining a major vulnerability and, implicitly, a source of risks to inflation, the sovereign risk premium and, ultimately, to economic growth sustainability, Board members reiterated. At the same time, Board members emphasised the heightened uncertainties that remained associated, also in the current domestic political situation, with the measures that might be adopted in order to keep the budget deficit on a sustainable downward path beyond this year, in line with the National Medium-Term Fiscal-Structural Plan agreed with the European Commission and with the excessive deficit procedure.   It was shown that significant uncertainties and risks to the outlook for economic activity, implicitly the medium-term inflation developments, continued to arise, however, also from the Middle East conflict and the energy crisis, but also from the global trade tensions, via the effects they could exert, through several channels, on consumer purchasing power and confidence, as well as on firms’ activity and profits, inter alia by affecting the dynamics of economies and inflation in Europe/worldwide and the risk perception towards the region, with an impact on financing costs.   Board members repeatedly underlined the importance of absorbing and using to the maximum the EU funds, especially those under the NRRP, essential at the current juncture for partly counterbalancing the contractionary effects of budget consolidation and of the Middle East conflict, as well as for carrying out the necessary structural reforms, energy transition included, but also for enhancing the growth potential and strengthening the resilience of the Romanian economy. Board members were of the unanimous opinion that the analysed context overall warranted a policy rate status-quo, with a view to ensuring and maintaining price stability over the medium term, in a manner conducive to achieving sustainable economic growth.   In addition, Board members reiterated the importance of further closely monitoring domestic and global developments so as to enable the NBR to tailor its available instruments in order to achieve the fundamental objective regarding medium-term price stability, while safeguarding financial stability.   Under the circumstances, the NBR Board unanimously decided to keep the monetary policy rate at 6.50 percent. Moreover, it decided to leave unchanged the lending (Lombard) facility rate at 7.50 percent and the deposit facility rate at 5.50 percent. Furthermore, the NBR Board unanimously decided to keep the existing levels of minimum reserve requirement ratios on both leu- and foreign currency-denominated liabilities of credit institutions.