smooth out excessive volatility, with inflation targeting as a monetary policy strategy and an active pursuit of measures to limit the degree of currency mismatches in the economy. as a matter of fact, in an imf paper published in 2003, the light version of inflation targeting is found to be widely spread among emerging economies, where fiscal dominance continues to weigh and monetary policy cannot set aside concerns over financial stability and external equilibria. 2. light inflation targeting in romania drawing the line after more than a decade of inflation targeting, i would say that we have managed to deliver steady disinflation and anchor expectations, even though the frequent occurrence of exogenous shocks led to high volatility in inflation and the occasional missing of annual targets. all central banks are familiar with supply - side shocks related to a surge or fall in commodity prices, but in romania we have also had to deal with large ( and not necessarily predictable ) adjustments in administered prices and frequent changes in indirect taxation. some of the latter were inherent to eu membership ( i. e. alignment of some excise bis central bankers ’ speeches duties ), but others were related to an erratic tax legislation. in such an environment, two features of the inflation targeting framework as implemented in romania appear as particularly relevant : • first, the focus on the medium - term achievement of the inflation objective, rather than hitting the target all the time. this approach allows for sustainable price stability without incurring the cost of excessive volatility in output and employment. • second, the ex - ante definition of a set of escape clauses that limit the central bank ’ s responsibility in attaining the annual target : 3. 1. marked increases / decreases in commodity prices 2. natural disasters and other similar exceptional events that induce cost - push or demand - pull inflationary effects 3. large fluctuations of the exchange rate of the leu that are decoupled from domestic economic fundamentals, as well as from the monetary policy pursued by the national bank of romania 4. major deviations from the administered price adjustment programme announced by the government, in terms of both magnitude and proposed calendar 5. divergence of the fiscal and income policies, in terms of implementation and outcomes, from the programmed coordinates case in point : monetary policy under a string of vat changes to give you a flavour of the environment the monetary policy has had to operate in lately, we had three vat rate cuts from 2013 to 2016, after a hike in 2010, and another

factors weighed on activity at the nation ’ s factories, whose output declined over the first half of 2019 and has been little changed, on net, since then. the february monetary policy report discusses the recent weakness in manufacturing. some of the uncertainties around trade have diminished recently, but risks to the outlook remain. in particular, we are closely monitoring the emergence of the coronavirus, which could lead to disruptions in china that spill over to the rest of the global economy. inflation ran below the fomc ’ s symmetric 2 percent objective throughout 2019. over the 12 months through december, overall inflation based on the price index for personal consumption expenditures was 1. 6 percent. core inflation, which excludes volatile food and energy prices, was also 1. 6 percent. over the next few months, we expect inflation to move closer to 2 percent, as unusually low readings from early 2019 drop out of the 12 - month calculation. the nation faces important longer - run challenges. labor force participation by individuals in their 1 / 2 bis central bankers'speeches prime working years is at its highest rate in more than a decade. however, it remains lower than in most other advanced economies, and there are troubling labor market disparities across racial and ethnic groups and across regions of the country. in addition, although it is encouraging that productivity growth, the main engine for raising wages and living standards over the longer term, has moved up recently, productivity gains have been subpar throughout this economic expansion. finding ways to boost labor force participation and productivity growth would benefit americans and should remain a national priority. monetary policy i will now turn to monetary policy. over the second half of 2019, the fomc shifted to a more accommodative stance of monetary policy to cushion the economy from weaker global growth and trade developments and to promote a faster return of inflation to our symmetric 2 percent objective. we lowered the federal funds target range at our july, september, and october meetings, bringing the current target range to 1 - 1 / 2 to 1 - 3 / 4 percent. at our subsequent meetings, with some uncertainties surrounding trade having diminished and amid some signs that global growth may be stabilizing, the committee left the policy rate unchanged. the fomc believes that the current stance of monetary policy will support continued economic growth, a strong labor market, and inflation returning to the committee ’ s symmetric 2 percent objective. as long as incoming information about the economy remains broadly consistent with this outlook