CPIF inflation became the Riksbank’s formal target variable in Sep-  tember 2017 instead of CPI inflation, but, in practice, also acted as target variable before then. See, for example, Ingves (2012). 9 See Jansson (2014), where I also note that it cannot be specified exactly how much this affected the repo rate. This is partly because the Riksbank’s monetary policy decisions are taken by a committee with six members, and partly because it can also be difficult for an individual member to specify how much of a rate rise is aimed at dampening the accumulation of debt, as opposed to dampening economic activity. The only conclusion that can be drawn is that ‘leaning against the wind’ was not extensive, but neither was it negligible. 8  4 [20]  leaning against the wind, even if there were, of course, different opinions on exactly how high the policy rate should be. 10 This was an educational period in many ways. Looking back on it with a few years’ perspective, there are two main conclusions, or lessons, that I would like to emphasise: (i) (ii)  It is important not to lose sight of inflation and inflation expectations. Fairly significant interest rate rises may be needed to brake the buildup of financial imbalances. I shall discuss these conclusions separately and explain what I mean in a little more detail.
Mugur Isărescu: Transition – how to secure a stronger economic future for the constituency? Speech by Mr Mugur Isărescu, Governor of the National Bank of Romania, in the panel on “Transition: How to Secure a Stronger Economic Future for the Constituency?”, during the annual meeting of the IMF and World Bank Constituency, Kyiv, Ukraine, 4 June 2016. *  *  *  Ladies and Gentlemen, In my address I would like to focus on the challenges in conducting monetary policy in a way that will contribute to securing a stronger economic future for countries in our constituency. Obviously, my account is shaped by Romania’s experience, but I hope it will still keep you interested, as it may be relevant for other small to medium-sized emerging economies. 1. Brief account of monetary policy regimes in Romania  At the time when the National Bank of Romania had to choose a strategy for conducting its monetary policy, i.e. in the early nineties, monetary targeting was actually the only feasible option. Not only did the low forex reserves preclude a fixed exchange rate arrangement, but, even if possible, the alternative was not suitable given the widening external imbalance. However, by the end of the decade, monetary targeting had reached its operational limits given the break in the relation between monetary aggregates and inflation, a phenomenon which matched developments elsewhere in the world. At that point, we took into account pegging the exchange rate, but neither the hard nor the soft version was deemed appropriate.