Romania

Romania had made little change to its command economy before the 1989 revolution, and reform after that was slow and erratic, but enough for it to embark on loose inflation targeting in 2006.

Years Targets and attainment Classification
1974-90 monobank financial system accommodating centrally set economic plan; multiple exchange rates for trade with both ‘non-socialist’ and ‘socialist’ countries multiple direct controls MDC
1991-2000 two-tier banking system from end-1990 but development of modern financial system with coherent monetary policy and instruments slow and tortuous; attempts to reform forex market and arrangements equally erratic; recurring fiscal dominance unstructured discretion UD
2001-05 unannounced exchange rate crawl at varying rates; fiscal dominance partly controlled, gradual move towards indirect monetary policy instruments; objectives clearer loosely structured discretion LSD
2006-13 inflation targeting from August 2005, convergence erratic with three large overshoots and two near misses in eight years, but evidence that inflation expectations anchored (albeit in top half of target band); interest rate corridor, but continued attention to exchange rate, width of corridor and recurring divergence between policy and ‘effective’ interest rates mean inflation targeting remains less than ‘fully-fledged’ loosely converging inflation targeting LCIT
2014-17 now continuous and static inflation target, but inflation targeting still not fully-fledged; targets attained 2014 and 2017, but large undershoots 2015-16 partly due to tax cuts, with financial analysts’ 2-year ahead inflation expectations remaining broadly within target band loose inflation targeting LIT

Selected IMF references: RED 1974 pp84-9; RED 1979 pp48-9; RED 1982 pp107-9; RED 1990 pp1-6, 61-2; RED 1992 pp6-9; RED 1997 pp11-13, 36-51, 53, ; SISA 2000 pp99-101; SISA 2007 pp12-16; SR 2012 pp17-19; SR 2014 p14; SR 2015 pp5, 13; SR 2017 pp5-6, 16, 58; SI 2017 pp32-52; SR 2018 pp12-13.

Additional sources: NBR Inflation Report, November 2016, p12 for inflation expectations.

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