BNR’s Isarescu anticipates the CPI will meet the fluctuation margin, expects the bank to complete two issues – price stability and financial stability

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The National Bank of Romania (BNR) will complete this year two issues – related to price stability and to financial stability, Governor Mugur Isarescu has said on Monday when presenting the report on financial stability. He added that most likely the Consumer Price Index will meet the fluctuation margin of 2.5% plus/minus one percent.

“By reading the report carefully, we have prepared the idea that the National Bank will complete two mandates. The one on price stability – most likely, there is one month to go however, the Consumer Price Index will meet the fluctuation margin of 2.5% plus/minus one percent. There is one problem, as some prices grow and the index is decreasing. When the CPI is 3.5% it means the prices are growing. But they grow less than last year,” Isarescu said, informs.

The BNR Governor also said that the bank will complete its mandate in regard to financial stability, but as there are vulnerabilities and risks this means the mandate hasn’t been completed. He stressed that sometimes the press is distorting the BNR language.

“When we talk about risks, we mean risks. It’s not a forecast. We say the market economy is cyclical and after several years, as we consider the development of the market economy and we know the cycle is 7-10 years on average, we see other risks and we say there is the risk of deceleration and then of recession – this does not necessarily mean we have made a forecast. There is a big difference when we say: there is the risk of deceleration, the recession is closing in – and headlines such as this one: the National Bank announces recession, forecasts disaster. Then they write: tough warning from the Governor. I waited all morning to find out what kind of tough warning I have sent. I nearly remained unshaved. Nothing was there, something about prices, but the headline was clear, I had delivered a tough message,” the BNR Governor said.

He has concluded that the bank’s message on twin deficits was that a recession should not catch us ‘off-guard’, meaning with high deficits, as we may not have the means to defend ourselves.

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