Speaking at the presentation of the quarterly inflation report, Isarescu said the central bank can lower its main interest rates to stimulate domestic consumption, but the process alone is not enough to support the economic recovery.
“We were counting that Romania’s economic downturn would have been somewhat balanced by attracting funds from the European Union, but the absorption rate never increased. The net inflows from the EU remained rather at pre-crisis levels,” Isarescu said.
He said foreign capital inflows and medium- and long-term loans from international markets plummeted to around EUR2 billion in 2011, from EUR16 billion in 2008.
“How can one expect to see economic growth when the gross fixed capital formation is posting such wide variations? These fluctuations cannot be compensated solely by adjusting the monetary policies,” the central bank’s chief said.
“Of course, lowering the interest rates would stimulate the growth, but the central bank can’t act alone,” Isarescu added.
The central bank last week lowered its key rate by a quarter of a point to a record low of 5.5% a year, the third cut in four months.