C-Bank governor vows to maintain inflation rate around 5%, despite deviations

The National Bank of Moldova (BNM) will do everything possible to achieve the established goals – to maintain price stability, ensure a 5 percent (±1 pp) inflation rate in 2010, and maintain a one-digit inflation rate in 2011- 2012, BNM Governor Dorin Dragutanu told a press conference on Tuesday, Info-Prim Neo reports. “It is possible that during 2010–2012, 12-month inflation rate could at times exceed the set limits. We acknowledge that certain events could occur that could cause such situations. But these deviations should not be interpreted as a failure of the BNM policies. The BNM actions should not be interpreted in reference to a short period of time but should rather be placed in a medium-term temporal context. Our goal is not to contain inflation at the level of 5% ± 1% on a daily basis or at the end of each month during this period. Our goal is to maintain, on a medium term, price stability, thus contributing to sound and sustainable economic growth”, he stated. Dragutanu says that the key elements of how the central bank is going to maintain price stability were included in BNM's Strategy on Monetary Policy, covering the period from 2010 to 2012. The Strategy is based on 3 principles, or the Three Cs: Clarity, Credibility of BNM, and transparent Communication. So, when explaining its monetary policy moves, BNM will indicate whichever factors influenced them, like shocks inflicted by the offer, the frailty of the fiscal institutions, the underdeveloped financial market, the vulnerability to the capital flows, labor migration and other features of a transition economy like Moldova's. Concerning communication, Dragutan said BNM published on its website the agenda of the monthly monetary policy meetings of the Administration Board (last Thursday of each month), and promised the decisions made during those meetings would be published the second day the latest. Also, each month after the publication of the consumer price index by the Statistics Bureau, BNM will publish press releases to explain changes in inflation and make forecasts. Another key publication will be the quarterly Monetary Policy Reports, which will contain macroeconomic analyses and middle-term forecasts. The BNM governor also promised he would be always open to the media and economic experts and would hold quarterly pres conferences.