This institution has supported the Romanian banking sector too, especially during the privatization process. Joining MIGA finalized the normalization process. 1/3  BIS - Central bankers' speeches  Throughout the 1990s and up until the EU granted Romania the functional market economy status in 2004, and later on, until the actual EU Accession in 2007, the IMF and the World Bank have been our main economic and financial external partners, during the transition. It goes without saying that one central pillar of this transition was represented by the continuous reforms of the national legislation regarding the central bank and the financial sector reforms, which have benefited from the extensive contributions of IMF and World Bank staff. For instance, the essential legislation governing the banking system was drafted with the assistance of IMF experts. In this context, I would like to mention the seven IMF Stand-by Agreements that, in addition to the Balance of Payments support, have also contributed to the implementation of structural reforms prior to the EU accession. Similarly, the World Bank's programs have contributed to the development of the Romanian financial and banking system (e.g. the Financial and Enterprise Sector Adjustment Loan (FESAL) – focused on reforming the financial sector, and the Private Sector Adjustment Loan (PSAL) – offered support towards the privatization of the Romanian banks and to the development of the monetary and capital market). During this transition period marked by major changes, I would like to highlight one element of continuity.
These two items, energy and food, are traditionally the most volatile items in headline inflation. Together they constitute about 30% of the average consumption basket, but they have by far the strongest impact on the perception of price increases: this is what consumers buy the most frequently. 1/3  BIS - Central bankers' speeches  On the other hand, we now face the risk of entrenched inflation, which lies in the underlying or 'core' component. It actually encompasses roughly 70% of the average consumption basket: manufactured goods, and services, which weigh roughly twice as much as manufactured goods. Core inflation has risen steadily while less fast over the past months, to reach 5.7% in March. In other words, inflation has become more widespread, and potentially more persistent. But monetary policy is most effective on core inflation, and it is our duty to bring it back under control. Our monetary policy response to rising inflation has been strong and swift. Our past rate increases (+350 basis points since last July) are in the process of passing through to the real economy, and we expect their effect to amplify in coming months. We at the ECB are now moving from a "sprint" to a "long-distance race": at our next meetings, we will make decisions on potential new rate hikes by looking at three key economic indicators: inflation outlook, underlying inflation and monetary policy transmission.