The inflationary flare-up in September, when the inflation jumped to 2.1% from the 0.3% all time low in August, is merely reflecting one of the weak links in the co-operation between the central bank and the Government, NBR Governor Mugur Isarescu on Friday said.
“Sudden leaps like that from 0.3% in August to 2.1% in September make it hard to manage monetary and foreign currency policies on short-term. The average 15.9% rate in the last 12 months is the highest overall level seen as of April and explains the steps recently taken by NBR to increase interests. The stated target is to maintain the inflationary rate at no more than 14% until December 2003,” the governor explained.
The overall consumer prices increase was mainly due to the substantial rise in the prices of natural gases and electrical power.
Following the Western model to approach complex issues in the provinces, as well, the NBR official on Friday delivered a lecture on the inflation pegging strategy at the University in Craiova. During his lecture he highlighted the disinflation results had been obtained due to an increasingly better co-operation between the central bank and the Government, mentioning the stage when the parties state their good intentions had been left behind, so that an actual co-operation going as far as to technical details was in place at the moment.
Isarescu, however, said this co-operation would need to gain “new qualities” now that the annual inflation was planned to be curbed from 14% to 5%.
“The moment we are no longer talking about pushing inflation down from 50-60% a year to 20-30% but from 14% to less than 5%, we are dealing with a new quality level, which leaves much less room for discretionary or insufficiently grounded decisions. If considered from this standpoint, the co-operation between the Government and the National Bank will have to gain new qualities,” Mugur Isarescu said.