Romania Holds Rate as Inflation Surges on Tax Hikes

The National Bank of Romania kept its benchmark interest rate at 6.50% in its October 8, 2025 meeting, marking the ninth consecutive pause in line with expectations. Inflation jumped to 9.85% in August from 5.66% in June, driven by the removal of the electricity price cap and higher VAT and excise taxes introduced on August 1. The bank expects inflation to peak in Q3 before easing, though pressures persist from supply shocks and high labor costs. Employment dipped slightly in June–July, but unemployment edged down to 6%, and hiring intentions improved modestly in September, especially in trade. Wage growth slowed but remained elevated. The NBR said fiscal tightening should aid disinflation by cooling demand and narrowing external imbalances, while warning of risks from fiscal adjustments, global trade uncertainty, and geopolitical tensions.