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(Bloomberg) — Romanian inflation remained at nearly three times the upper band of the central bank’s target range after government action to curb the budget deficit helped fuel price growth.
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Consumer prices rose 9.7% in December from a year earlier, just slightly below the November reading, the statistics office in Bucharest said Wednesday. That’s in line with the median estimate in a Bloomberg survey of economists and higher than the central bank’s forecast of 9.6%. Prices rose 0.2% from the previous month.
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After overcoming the worst political crisis since the collapse of communism, Romania’s pro-European administration adopted a raft of tax increases to cut a budget shortfall of more than 9% of gross domestic product to below 8.4% in 2025. But added to a decision to eliminate an energy price cap, the steps had a bigger-than-expected impact on consumer prices, according to central bank Governor Mugur Isarescu.
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While the December reading is far above the central bank’s upper target band of 3.5%, policymakers in the Black Sea country have repeatedly said they expect price growth to slow sharply in the second half of 2026. Officials have held the key rate at 6.5% since the middle of 2024.
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Inflation should ease “significantly” to 4% by year-end, allowing the central bank to cut the benchmark rate to 5.25%, according to Raiffeisen Bank SA economist Nicolae Covrig.
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“With inflation decreasing and fiscal consolidation progressing, we expect the central bank to resume its key rate cutting cycle this year in May at the earliest,” he said in a report before the data release.
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—With assistance from Harumi Ichikura and Rafael Mendes.
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