The annual growth rate of credit to the private sector climbed further in December 2021, albeit visibly more slowly, reaching 14.8 percent from 14.6 percent in November, solely due to the component in local currency. Leu-denominated loans saw their annual dynamics accelerate further in 2021, to 19.6 percent in December from 19.0 percent in November, also backed by government programs, with their share in total thus widening to 72.4 percent. Nowadays, as many other EU member states, Romania is preoccupied by the geopolitical and energy situation and their considerable impact on inflation. Inflationary shocks on the energy components of the consumption basket hit repeatedly throughout second half of 2021. These were partly offset by a government support scheme, in effect from November 2021. Nevertheless, the energy component still accounted for more than half of the overall annual inflation rate by the end of 2021. It is a fact now that approximately 85 percent of the CPI has root in the energy price surge. Therefore, the inflation expectations on the 1-year horizon have risen sharply, reflecting current developments. The positioning of the 2-year ahead expectations close to the target variation band suggests that the anchoring mechanism is still in place. However, specific measure to address energy situation is a need. Uncertainties continue to stem from the evolution of the pandemic as well, given the current wave, triggered by the more contagious Omicron variant of the coronavirus although the variant seems to be less virulent.

Jordà, Ò., Schularick, M., and A. Taylor (2013): “When Credit Bites Back”, Journal of Money, Credit and Banking, Supplement to 45(2). Kashyap, A. K., Tsomocos, D. P., and A. P. Vardoulakis (2014): “A programme for improving macroprudential regulation”, published in Macroprudentialism, edited by Dirk Schoenmaker, CEPR Press. http://voxeu.org/sites/default/files/file/macroprudentialism_VoxEU_0.pdf  14  All speeches are available online at www.bankofengland.co.uk/speeches  14  Knight, F. H. (1921): Risk, Uncertainty and Profit, Boston: Houghton Mifflin. Korinek, A., and A. Simsek (2016): “Liquidity Trap and Excessive Leverage”, American Economic Review, 106(3), 699-738. Miles, D., Yang, L., and G. Marcheggiano (2013), “Optimal Bank Capital”, Economic Journal, 123, 1-37. Modigliani, F., and M. Miller (1958): “The Cost of Capital, Corporation Finance, and the Theory of Investment”, American Economic Review, 48(3), 2. Rosengren, E. S. (2011): “Defining Financial Stability, and Some Policy Implications of Applying the Definition”, Keynote Remarks at the Stanford Finance Forum, Graduate School of Business, Stanford University, 3 June. 15  All speeches are available online at www.bankofengland.co.uk/speeches  15  1  Recognising this, others have started to take stock on progress on macroprudential frameworks. The most notable contribution to this effort is a recent report to the G20 by the IMF, the FSB and the BIS (IMF-FSB-BIS, 2016). 2 The basis of many of the ideas in this section stems from Kashyap et al (2014). 3 James Carville, strategist for Bill Clinton’s 1992 presidential campaign, coined the phrase ‘The economy, stupid’. 4 See Rosengren (2011).