Cosmin Marinescu calls for prudent monetary policy, warning about the risks of mechanistic decisions and economic imbalances

BNR Deputy Governor Cosmin Marinescu advocates a prudent monetary policy grounded in long-term perspectives in a study on the inflation-targeting strategy. He warns that decisions based excessively on short-term indicators and standard responses may perpetuate economic imbalances and push monetary policy into the trap of procyclicality.

Marinescu argues that the strategy adopted by the BNR in 2005 contributed to reducing and stabilizing inflation, but that its effectiveness has limits. In the 21 years analyzed, inflation remained within the range associated with the target in only six years and exceeded the target in 12 years, highlighting persistent vulnerabilities.

The deputy governor also criticizes monetary easing in 2024, when the policy rate was cut in July and August despite the risks generated by fiscal expansion. Romania recorded an ESA deficit of 9.3% of GDP at the time, while economic growth remained modest.

In his view, the central bank must distinguish between demand, supply and monetary shocks. For the coming years, Marinescu considers the consolidation of public finances, the reduction of the deficit and debt, as well as a coherent policy mix essential for price stability and sustainable growth.