Romania’s economy has cooled, but inflation hasn’t. Years of wage-driven demand, repeated energy and tax shocks, and stubborn services inflation are making the road back to price stability unusually slow Romania has not looked like an overheating economy for more than two years. Growth has stalled, wage growth has slowed sharply, real incomes are under pressure, and fiscal policy has tightened. Yet underlying inflation remains stubbornly high relative to both the rest of Europe and the National Bank of Romania’s (NBR) target. This disconnect between a cooling economy and persistent inflation is Romania's central macroeconomic story.
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