Romania Ctrl Bker: Sustainable Disinflation, More Important Than Inflation Target

Speaking in a symposium on inflation issues, Isarescu said that the central bank didn’t lack the means reach its inflation target last year, but the process would have negatively affected the economy.

Strengthening the monetary policy to soften the impact of the higher excise duties and fuel prices in December would have put additional downward pressure on the gross domestic product, he added.

„It’s not fair to make such a trade-off. You win credibility and lose in a different category (…). I believe that a sustainable disinflation is more important, even when you eye an inflation target,” Isarescu said.

Isarescu said inflation targeting doesn’t imply reaching a particular figure at the end of the year and that many countries only announce a possible interval for the inflation, without setting a main target.

According to Constantin Chirca, head of the central bank’s Statistics Division, Romania’s annual inflation would have reached 2.79% in December last year, excluding the contribution of the tobacco and cigarettes prices .

Romania’s consumer price index rose by 32 basis points on the month in December, driven mainly by higher food and tobacco prices, while the annual inflation widened to 4.7%, above the central bank’s upper target limit of 4.5%.

It was the third consecutive year when the central bank missed its inflation target.