The National Bank of Romania (BNR) has slightly raised its inflation forecast for the end of 2026 to 3.9%, up from 3.7% previously, and now expects inflation to fall to 2.7% by the end of 2027, Governor Mugur Isarescu said on Wednesday when presenting the central bank's latest Quarterly Inflation Report.
Mugur Isarescu explained that the updated projection reflects a modest uptick in the second quarter, driven by gas prices. He noted that the central bank only incorporates into its forecasts measures that have been formally adopted.
"We do not yet know what package of measures the Government will ultimately approve. We have heard statements about a strong programme being prepared, but we include in our projections only what is officially adopted in legal form. If the gas price cap is extended, the red curve will likely overlap with the blue one," the BNR Governor said.
He added that inflation is expected to decline sharply in the coming months. "It will fall rapidly, within a few months, from 9% to around 3%. This is a correction. Our projection shows monthly inflation running at 0.3% to 0.4%, which translates into roughly 4% annually. By the end of the year and the beginning of next year, we should move back within the inflation target band," Isarescu explained.
The BNR Governor also addressed criticism that the central bank has failed to meet its inflation target for four consecutive years.
"That observation is correct. For four years, the National Bank has missed its inflation target. But inflation in the euro area also exceeded forecasts in 2022 and 2023. We must not overlook what this country has gone through: a pandemic, a war at our border, an energy crisis with a major impact on prices, and, in addition, a prolonged electoral period that effectively turned into a political crisis. We certainly do not need another one. We must remain cautious," Isarescu said.
The Governor of the National Bank of Romania presented the new Quarterly Inflation Report at a press conference on Wednesday.
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