Societe Generale strategists note the National Bank of Romania (NBR) kept its policy rate at 6.50% and reinforced a hawkish stance as earlier inflation risks are now part of the baseline. Political conditions improved after PM-designate Luca Niculescu secured conditional backing from the Social Democrats, boosting hopes of a broad coalition. This optimism pushed EUR/RON below 5.35 and 10-year RONGB yields under 7.10%.

NBR hawkish and politics turn supportive

"In Romania, the NBR kept the policy rate on hold at 6.50% and reinforced its hawkish stance."

"Risks flagged in August (higher commodity prices, drought-related food inflation and RON depreciation) are now embedded in the baseline."

"The political outlook also improved after PM-designate Luca Niculescu received conditional backing from the Social Democrats, parliament’s largest party."

"Prospects of a return to a broad coalition with the Liberals and ethnic Hungarian party raised hopes of ending the deadlock weighing on fiscal consolidation and threatening the country’s IG rating."

"Optimism pushed EUR/RON below 5.35 and the 10y RONGB yield below 7.10%."

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