Cristian Popa, a member of the board at the National Bank of Romania (BNR), explained at the ZF Power Summit that what the central bank is doing now is trying to slow down the transmission of energy prices to the rest of the prices.

Romanian central bank's dovish monetary policy stance, arguably revisited following the latest monetary board meeting that resulted in a 50bp rate hike, stands out in the region where central bankers took more decisive steps at earlier stages.

Attempts to act so strongly as to target the energy prices themselves would be very costly for the entire economy, as it would require very high interest rates, BNR's board member Popa argued.

"If we tried to fight gas prices, we would put the economy in jeopardy. We would create a state of recession, we would increase unemployment," he explained, according to Ziarul Financiar.

Possibly not intended to be a direct answer, his statement comes after Liberal leader and former finance minister Florin Citu has asked rhetorically in a Facebook post how much should the refinancing rate rise in response to the headline inflation heading to 11.2% as of April. BNR's board member Popa explained, however, that the headline inflation wouldn't get into the double-digit area if the Government keeps in place the 'cap and subsidy' scheme after April 1 is intended. 

iulian@romania-insider.com

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