CEE Central Bankers: 2025 Performance & Economic Outlook
Navigating Economic Headwinds: Central Bank Performance in Central and Eastern Europe 2025
The year 2025 presents a multifaceted economic landscape for Central and Eastern European (CEE) nations, characterized by persistent inflationary pressures, geopolitical complexities, and ongoing efforts towards economic integration and stability. Central banks across the region have been at the forefront of these challenges, employing diverse monetary policies to safeguard price stability, foster sustainable growth, and maintain investor confidence. This report card provides an analytical overview of key central banker performances and the broader economic conditions shaping the CEE region in 2025.
Key Trends and Challenges Across the Region
Several overarching themes define the CEE economic narrative this year. Inflation management remains a primary concern for most central banks, with diverse approaches to interest rate policies, ranging from easing cycles in some countries to sustained high rates in others. Geopolitical factors, particularly the ongoing conflicts in Eastern Europe, have exerted significant influence on economies like Armenia, Ukraine, and Russia, affecting trade, investment, and refugee flows. Furthermore, aspirations for European Union (EU) integration continue to shape reform agendas and monetary policy decisions in countries like Albania and Bulgaria, leading to significant structural adjustments.
Country-Specific Analyses
Albania | Gent Sejko: B
Governor Gent Sejko, celebrating a decade at the helm of the Bank of Albania, merits recognition for the nation's remarkable economic progress. Albania, while still among Europe's less affluent countries, has demonstrated an impressive turnaround, with GDP per capita rising and consistent high GDP growth rates (3.9% in 2024, projected 3.2% for 2025) driven by robust consumption, construction, and tourism. The formal initiation of EU accession negotiations in October 2024 underscores the country's reform trajectory. Sejko's leadership has been a stabilizing force, prioritizing market confidence. Despite an inflation target of 3%, Albania has largely undershot this, averaging 2.4% in 2024, prompting easing of rates to 2.5% in July 2025 to nudge inflation towards target. Regulatory enhancements in financial marketing were also introduced in 2024 to boost transparency and consumer protection.
Armenia | Martin Galstyan: B
Since April 2020, Governor Martin Galstyan of the Central Bank of Armenia (CBA) has skillfully navigated significant geopolitical challenges, including a substantial influx of refugees from Nagorno-Karabakh, Russia, and Ukraine. This migration has placed considerable pressure on Armenia's small economy. Despite these headwinds, Galstyan has maintained a steady hand, a testament to which is the CBA's decision to lower its inflation target to 3% (with a ±1.0 percentage point band) from 4% in late 2024, signaling confidence in long-term price stability. With annual inflation rates hovering around 3.2% in 2025 and 3.3% projected for 2026, monetary policy is deemed appropriate by the IMF. Policy rates have been cumulatively cut by 225 basis points since 2024 to 6.75%. Notably, dollarization has shown a consistent decline since its 2014 peak, reflecting increased trust in the national currency.
Belarus | Roman Golovchenko: Too Early To Say
The appointment of former Prime Minister Roman Golovchenko to lead the National Bank of Belarus in January 2025, succeeding Pavel Kallaur, has raised concerns among observers regarding a potential shift towards less independent monetary policy. Kallaur, despite the reintroduction of some central planning practices, was credited with modernizing the central bank. Golovchenko, a political loyalist, takes charge as Belarus deepens its ties with Russia. While official figures indicate 4% GDP growth last year, the drivers—consumer spending and Russian military demand—are decelerating amidst rising inflation. With an inflation target of 5% but an actual rate of 7.4%, the governor's assertion that the 9.75% refinancing rate (raised by 25 bps in June) is appropriate has done little to inspire confidence, signaling potential future policy challenges.
Bosnia & Herzegovina | Jasmina Selimović: B
As Bosnia's first female Central Bank (CBBH) governor, Jasmina Selimović has played a crucial role in providing reassurance in an increasingly volatile political environment. Her main challenge has been to navigate the country through concerns over its constitutional stability. For 25 years, Bosnia and Herzegovina has maintained a currency board, pegging its Convertible Mark (BAM) to the euro, ensuring full convertibility. Beyond political tensions, the nation grapples with persistent issues of transparency in its business environment, as highlighted by a drop in its Corruption Perceptions Index ranking. The CBBH, under Selimović, emphasizes adherence to EU corruption prevention standards and monitors business compliance to mitigate financial risks and uphold its reputation.
Bulgaria | Dimitar Radev: B+
Dimitar Radev's decade-long tenure as governor of the Bulgarian National Bank, culminating in July 2025, represents a significant achievement for a country often characterized by political instability. His unwavering commitment to sound money has been a key factor in Bulgaria's successful bid for euro accession, slated for January 2026. This milestone required meticulous inflation management; despite a spike to 4% in January 2025 post-price control removal, inflation retracted to 2.7% by April, with interest rates at 3.9%. Bulgaria also boasts low public debt at 24%, well below the Eurozone limit. The long-standing currency board, which pegged the lev to the euro since 1999, will see a fundamental shift in reserve requirements from 12% to 1% upon euro adoption, presenting a new operational dynamic for the BNB.
Czech Republic | Aleš Michl: A-
The Czech National Bank (CNB), under Governor Aleš Michl, has maintained a "steady as she goes" monetary policy approach. Following gradual easing in 2024, the CNB implemented two rate cuts in February and May 2025, with Fitch Ratings anticipating the policy rate to remain at 3.5% throughout the year. Despite headline CPI reinforcing inflationary concerns at 2.7% in July and August against a 2% (+/- 1%) target, the CNB held its interest rate at 3.5% in September. Projections suggest average inflation of 2.5% in 2025, falling to 2.2% in 2026, primarily driven by a robust domestic economy, strong property and services sectors, and wage-driven inflation. Real GDP growth of 2.6% in Q2 2025 aligns with independent forecasts, indicating a well-balanced economy characterized by stable, non-inflationary growth under Michl's stewardship.
Georgia | Natia Turnava: C
Natia Turnava's confirmation as governor of the National Bank of Georgia (NBG) in February 2025, a former member of the ruling government, suggests a prioritization of continuity. This appointment occurs amid persistent concerns about Tbilisi's commitment to economic reforms and Western integration, which contributed to a 30% decline in Foreign Direct Investment (FDI) in 2024. Turnava has successfully focused on price stability, with inflation dipping below the 3% target in 2024 despite strong domestic demand, and an expected average of 3.2% in 2025. Interest rates are projected to remain stable at 8%, with no immediate cuts anticipated, as the NBG seeks to reduce dollarization. Efforts to boost foreign reserves have seen a 5.4% increase by June 2025, reaching approximately $4.7 billion, complemented by strategic gold purchases to diversify the NBG's asset base.
Hungary | Mihály Varga: Too Early To Say
Mihály Varga commenced his six-year term as governor of the National Bank of Hungary (NBH) in March 2025, asserting the economy's sound footing and favorable growth prospects. However, Hungary remains an outlier in the CEE region due to persistent inflation, currently around 4.6% year-on-year. Economic growth has been sluggish, projected at 0.8-1% for 2025, significantly below the NBH's earlier forecasts. Varga appears to acknowledge this structural inflation problem, evidenced by the decision to maintain interest rates at 6.5% since August, for the eleventh consecutive month, despite subdued growth. The economy faces strong headwinds from US tariffs and drought-induced food price pressures. ING forecasts inflation to rise to around 5% in Q4 2025, averaging 4.6% for the year, and projecting persistent inflationary expectations into 2026 and 2027.
Poland | Adam Glapiński: B
Governor Adam Glapiński of Narodowy Bank Polski (NBP) experienced a less contentious 2025 compared to the previous year, when he faced threats of removal. The NBP's decision to cut interest rates by 25 basis points to 4.75% in July, following an earlier reduction, signals a front-loaded easing cycle, with ING Bank anticipating a target rate of 3.5% by early Spring 2026. Headline inflation is trending towards the NBP's target range of 1.5% to 3.5%, expected to reach approximately 2.5% by year-end. Growth, driven by a robust services sector, saw GDP expand by 3.4% year-on-year in Q2 2025, with full-year growth projected at 3.5%. However, Glapiński has cautioned against risks from a rising fiscal deficit, which reached 6.6% of GDP in 2024, highlighting the need for fiscal tightening.
Romania | Mugur Isărescu: B-
Mugur Isărescu, the world's longest-serving central bank governor, has navigated a challenging year marked by rising inflation and sluggish growth. Romania's economic structure inherently struggles with sticky inflation, exacerbated by wage increases, strong demand for imports, and fiscal stimulus that pushed the budget deficit to 9.3% in 2024, with inflation well above target at 5.8%. Amidst a shifting political landscape, Isărescu maintained a cautious stance, holding interest rates at 6.5% since August 2024, with reductions unlikely until a significant decline in inflation is observed. However, inflation continued to rise, reaching around 6% by mid-year, paradoxically influenced by the government's fiscal reduction package which included inflationary excise duty increases. ING forecasted a 2025 year-end inflation of 7.5%, constraining any immediate monetary easing by the NBR.
Russia | Elvira Nabiullina: N/A
Once lauded for her competence, Governor Elvira Nabiullina's reputation has been reevaluated amidst her role in supporting Russia's war economy, leading to policies characterized by caution and stability. While she has achieved some success in combating inflation, which stood at 8.8% in July against a 2026 target of 4%, this has come at the cost of high real interest rates (around 17%), reinforcing economic stagnation. As Russia attempts to reorient its economy towards civilian priorities, Nabiullina faces a complex path. Further rate cuts could trigger ruble depreciation and renewed inflationary pressures. Moreover, significant concerns loom over the banking sector, fueled by a 45% surge in corporate loans since the war's onset, largely to entities linked to the war effort. Eurasia Group warns that a large-scale banking crisis, if uncontained, could lead to a severe recession.
Serbia | Jorgovanka Tabaković: A-
Jorgovanka Tabaković's commencement of her third term as governor of the National Bank of Serbia (NBS) (2024-2030) underscores her proven track record. Her tenure is defined by a cautious yet effective approach to monetary policy, crucial in a politically sensitive environment. Inflation, at 3.8% in mid-2025, is on track to meet the 3% target by year-end, largely attributed to high real interest rates (5.75%) and the successful managed narrow float of the dinar against the euro, which has suppressed prices and minimized exchange risk. To bolster resilience against global uncertainties, the NBS has strategically increased its gold reserves to 50.5 tonnes, representing nearly 17% of its €28 billion foreign reserves. Additionally, Serbia has implemented new banking regulations, enhancing prudential frameworks and expanding the central bank's supervisory powers, reflecting a commitment to financial stability.
Turkey | Fatih Karahan: B
Appointed in February 2024 as Turkey's sixth central bank governor in five years, Fatih Karahan has focused on establishing credibility and commitment to stability. His primary objectives include bringing Turkey's rampant inflation under control and reducing dollarization. Karahan's strategy involves increasing Turkish lira deposits, gradually phasing out FX-protected deposits, and regulating credit growth. This multi-pronged approach has yielded some success, with inflation falling from 44.4% at year-end 2024 to 33% by August 2025, though meeting the 24% year-end target remains a challenge. Interest rates, after an initial hike to 42.5% in March 2025 in response to political instability, were subsequently reduced to 40.5%. However, as Fitch Ratings warned, the Central Bank of the Republic of Türkiye (CBRT) remains vulnerable to external political events, highlighting the precarious balance required in its policy execution.
Ukraine | Andriy Pyshnyy: N/A
The National Bank of Ukraine, under Governor Andriy Pyshnyy, operates within the profound context of the ongoing war with Russia, which has significantly exacerbated economic challenges. Ukraine's economy is now approximately 20% smaller than in February 2022, with widespread damage to infrastructure and industry. Pyshnyy has appealed to international investors for support, estimating a trillion-dollar rebuilding effort. In July, he announced a steady key interest rate of 15.5% and projected a slowdown in GDP growth to 2.1% in 2025 from 2.9% in 2024, a larger contraction than initially forecast, partly due to a poor harvest. He acknowledged that the pace of recovery is contingent on the war's progression and highlighted the adverse impact of aid shortfalls on growth and confidence. Inflation is expected to reach 9.7% by end-2025, slowing to 6.6% in 2026, against a 5% target, underscoring the immense pressures on monetary policy amidst conflict.
Conclusion
The 2025 central banker report cards for Central and Eastern Europe reveal a region grappling with a complex array of economic and geopolitical forces. While some central banks have demonstrated remarkable resilience and strategic foresight in achieving stability and growth, others face significant structural and external impediments. The varying grades reflect the diverse challenges and policy responses, from successful inflation targeting and EU integration efforts to navigating war-torn economies and political interference. The importance of central bank independence, adaptive policymaking, and sustained commitment to financial stability remains paramount for the CEE region's continued economic health and future prosperity.
