The annual headline inflation rate is expected to return to a clearer downward trajectory only in the second half of the year, however this process requires time and caution in calibrating economic policies, Deputy Governor of the National Bank of Romania (BNR) Cosmin Marinescu said on Monday at the "Economic Trends 2026" conference.
"From the perspective of the BNR's objectives, recent developments show that inflation continues to persist at high levels. The components most sensitive to recent shocks are exogenous, namely fuel and unprocessed food. In the context of the war and blockages in transport and supply routes, inflation expectations are unfortunately being strongly reactivated. We anticipate that the annual headline inflation rate will return to a clearer downward path only in the second half of the year, but returning to the target still requires time and caution in calibrating economic policies. Under current conditions, disinflation can no longer be easily anticipated or occur as a uniform, linear process. (...) Monetary policy must respond to the fundamental drivers of inflation, not to temporary fluctuations. Currently, monetary policy is confronted with the essential challenge of avoiding adding salt to the wound by raising the key interest rate despite inflationary spikes, while also avoiding adding fuel to the fire in a financial context dominated by multiple risks," Marinescu said.
He underscored that the process of budgetary consolidation must continue, which requires, among other things, political stability and consistency in decision-making.
"It is imperative to continue budgetary consolidation, an objective that demands, among other things, political stability and consistency in decision-making. Unfortunately, even these requirements seem subject to volatility, if we consider, for example, the tense atmosphere surrounding the approval of the budget in Parliament just a few days ago. In complicated times, against the backdrop of the war in the Middle East, such tensions and uncertainties translate directly into financial costs, into higher borrowing interest rates, but also into increased pressures on the exchange rate, and these effects can sometimes amount to billions of euros, which, of course, must be avoided. In the 2025 budget, interest payments are rising worryingly, from a sustainability perspective, to around 3% of GDP, or nearly half of the budget deficit. The assumed budget deficit of 6.2% of GDP does not include, be aware, the growing risks from current global tensions," the BNR Deputy Governor said.
In his view, a priority for the Romanian state should be reducing financing costs, however this requires long-term fiscal and budgetary discipline.
From the BNR representative's perspective, in terms of economic growth, the start of 2026 has brought some negative developments, following the activity in industry and retail trade.
"Romania continued to record economic growth in 2025, although at a slightly slower pace than in previous years, and despite the severe but necessary budgetary adjustments. The start of 2026 is marked by some negative developments and I am mentioning here the industry, which fell by 3.9% in January, and in retail turnover, which declined by 9.1%. The signals of restructuring and layoffs among major industrial players, such as benchmark companies Dacia and Azomures - companies that have achieved exceptional performance, particularly in exports, even in difficult times - are genuinely concerning. However, the 2025 developments also show positive signs: the economy is gradually shifting its sources of growth. The contribution of investment to the 0.7% economic growth was one percentage point, well above consumption, whose contribution was only 0.4 points. It is important to consolidate this path in order to accelerate the productive potential of our economy," Marinescu conveyed.
The European Business Women's Confederation (PEFA) organised on Monday the 4th edition of the "Economic Trends 2026" conference. The event brought together policymakers, experts and business representatives to outline the main directions of macroeconomic, energy and entrepreneurial developments for the year.
Comentează