Romania, Serbia Hold Rates Amid Inflation Risks

Romania's central bank is expected to keep its benchmark interest rate at 6.5% during its July meeting, as government tax hikes are predicted to push inflation to 5.6% year-on-year at the end of June and up to 6.0%-6.2% by the end of 2025, above the central bank's 4.6% target. ING economists caution that higher VAT and the lack of public wage or pension indexation in 2026 could undermine consumer confidence and stall economic growth, with a mild recession possible. The central bank is anticipated to maintain its current monetary policy stance until at least the first quarter of 2026. Meanwhile, Serbia's central bank has also kept its rate steady at 5.75% amid global and regional uncertainties, including energy price volatility linked to Middle East tensions. Both Romania and Serbia are experiencing sustained inflationary pressures and tight fiscal measures. These factors are contributing to a prolonged period of restrictive monetary policy and subdued economic prospects in both countries.