Isarescu was invited to speak to the Senate’s economic committee. He told senators the central bank cannot influence the government’s decisions but may intervene with other instruments, such as monetary policy.
“It has been asked why the central bank raised the monetary policy rate. The situation is Romania is different than in other countries. One difference is that their inflation rate is within the targeted interval, while in Romania it’s at 4.7%. The inflation rate is currently at 1.8 in Czech Republic, 1.4% in Poland, and 1.9% in Hungary. We did have negative inflation but true inflation was screened by fiscal measures, by the cut in the value-added tax. If we were to calculate the inflation rate excluding the fiscal impact, it would have been positive in the second half of last year. We target inflation indirectly. We have no influence on administered prices, those are established by the Government. We have no power over fiscal policy,” Isarescu said.
Romania’s inflation spiked to an annual rate of 4.7% in February.