Radev says October rate pause does not end tightening
Bulgarian National Bank Governor Dimitar Radev said further European Central Bank (ECB) rate increases may be necessary if inflation pressures persist. He warned that the energy shock risks prolonging inflation above target despite weaker demand.
December tests the inflation outlook
Radev backed the ECB's October 29 decision to hold all three key rates after September's increase, but said the pause did not end tightening.
Euro area inflation reached 3.8 percent in September as energy prices exceeded projections.
Underlying inflation remained broadly stable, without widespread transmission to wages.
Professional forecasters raised 2027 headline and core inflation expectations to 2.6 and 2.5 percent; longer-term expectations stayed at 2 percent.
Radev urged attention to second-round effects before they become established.
Higher bond yields and tighter bank financing restrain demand.
December projections and data will inform meeting-by-meeting decisions; persistent pressures may require further increases, with no commitment to a particular decision.
Euro membership leaves domestic risks
The Bulgarian National Bank has participated fully in the Eurosystem since the start of 2026, following years under a currency board.
Bulgaria's September Harmonised Index of Consumer Prices inflation was 5.6 percent, versus 3.8 percent across the euro area.
Radev said domestic demand, credit and financing conditions still matter.
Banks remain well capitalised and liquid, but strong credit growth, particularly in housing, warrants preventive supervision and macroprudential policy.
He called for maintaining adequate buffers before risks materialise.
Confidence requires more than rates
Radev said energy-related fiscal support must be temporary, targeted and tailored to national circumstances.
Uncertain public finances and business rules can weaken confidence and policy transmission.
He linked banking union and the Savings and Investments Union to productive investment, supported by credible institutions.