Inflation in Bulgaria is expected to reach 6% in October, while price pressures in the country remain stronger than the eurozone average. This was stated by Bulgarian National Bank Governor Dimitar Radev at a forum of the Official Monetary and Financial Institutions Forum (OMFIF) in Sofia.
In September, annual inflation in Bulgaria stood at 5.6%, measured by the Harmonised Index of Consumer Prices, compared with an average of 3.8% for the eurozone. Radev specified that he expects preliminary data for October to show a further increase to 6%. The National Statistical Institute’s final data for the month are scheduled to be published on 16 November.
Joining the eurozone does not eliminate the differences between national economies, nor does it eliminate the need for sound domestic policies. Inflation dynamics are a telling example.According to Radev, the common monetary policy provides the framework for price stability in the eurozone, but national conditions continue to matter. Among the factors, he pointed to domestic demand, credit dynamics and financing conditions.
The BNB governor said that Bulgaria’s banking sector remains well capitalised and liquid, while lending continues to grow at a rapid pace. Housing loans are increasing particularly quickly.
According to Radev, this requires a preventive approach by supervisory authorities and the implementation of macroprudential measures. He stressed that banks’ strong performance is not a reason to ease requirements.
When such changes may affect the resilience of banks, lending or the cost of financing, an independent central bank has a responsibility to assess the consequences and present them clearly to the public.Radev also commented on the European Central Bank’s decision on 29 October to leave the three key interest rates unchanged. In his words, the October pause is necessary to assess the impact of the energy shock and the tightening of financial conditions.
He clarified, however, that the decision does not mean the end of monetary policy tightening. If incoming data confirm that inflationary pressures are becoming more persistent, a further increase in interest rates may be necessary.
Energy prices are among the reasons for higher-than-expected inflation in the eurozone. For now, core inflation remains relatively stable, and there has been no broad pass-through of the energy shock to wages. Radev described this as a positive sign but warned that risks remain.
Expectations for headline inflation in the eurozone in 2027 have been revised upwards to 2.6%, while the forecast for core inflation is 2.5%. Long-term inflation expectations, however, remain around the 2% target.