Inflation has reached a plateau and will henceforth go down if the monetary and budget policies are appropriate, says Fiscal Council chairman Daniel Daianu, according to Agerpres.
„Why do we focus our attention much more on inflation? Because we have witnessed a strong resurgence of inflation, one can even call it an explosion, in 2021. For almost two decades we have lived with a very low inflation accompanied by a very low regime of interest rates. I don’t think we have reason now to go back into the explanatory history of this regime of very low inflation and very low interest rates because such debates are no longer a novelty and we would just kill time digging into this archeology of events. It is a fact that inflation surged in 2022, it was already felt in 2021, and what I think is worth mentioning right from the start is that it has seemingly reached a plateau and from now on it will go down, provided that policies are appropriate, and here I mean the monetary policies which have tightened very much even if the monetary policy rates have remained negative in real terms, and budgetary policies. I say budgetary policies because taxation is a component of the budgetary policy. It very much depends, or perhaps in the current conditions it primarily depends on spending, on the trend of the fiscal policy,” Daianu explained on Thursday at the conference ‘Economy and Inflation’, an event of the ‘Romania Where To?’ cycle organized by Oxygen Events .
He also stated that there are clear signs that inflation will go down, but it is important that the mentioned policies do not weaken on an immediate horizon and maybe even in the medium term.
„The biggest danger derives from the possibility of entering into a kind of wage-price spiral. This would be devastating and whenever we had historical periods of very high inflation – three to four decades ago in the United States, and Europe too experienced longer inflationary episodes – we had this spiral, this buildup where prices and wages feed off each other,” said Daniel Daianu.
Agerpres
