The National Bank of Romania (BNR) at its May 15 board meeting kept the policy rate at 6.5%, which did not surprise analysts, who are predicting a rate cut no sooner than 2027, a monetary authority’s release reads. BNR reiterated its expectations for a substantial downward correction of the headline inflation in 2026 Q3, generated by base effects and the strengthening of disinflationary pressures, particularly from the aggregate demand deficit – but a detailed updated Inflation Report will be released on May 19. BNR cited inflation rising above expectations in Q2 due to Middle East-related effects and internal factors, such as the hike in regulated rent prices for state-owned housing units.  Besides the steep disinflation expected in Q3, shaped by base effects of electricity price liberalisation and VAT rate hike last year, the monetary authority cited inflationary pressures likely to manifest after mid-year: the natural gas liberalisation for non-residential users (April 1) and the expiry of the food price capping mechanism (July 1).