Three years since it began to apply its inflation targeting strategy, the NBR (National Bank of Romania) is faced with the very clear prospect of missing this year's target and also runs the significant risk of missing it again in 2009.

In 2005, the first year of inflation targeting, inflation stood at 8.6%, although the target was 7.5%, in 2006 it saw a spectacular decline and reached 4.9%, below the 5% target, while in 2007 it climbed back, just as spectacularly, and reached 6.6%, above the 4% target.

The fight against prices has become much tougher this year, given the context of the international crisis, of the explosive increase in oil prices, as well as the prices of other raw materials.

Under the circumstances, analysts believe there is no viable alternative to the inflation targeting strategy, and the role of the exchange rate remains very important, which makes the strategy applied by the NBR a hybrid one. They also think the central bank should be more transparent and communicate better.

Economics professor Daniel Daianu believes the monetary policy will have to be reviewed as the euro adoption date approaches.

"At present, there is no reason for us to give it up. Anyway, we are using a hybrid strategy, which is somewhat more flexible. As we approach the deadline for adopting the euro (providing that this stays a major objective for Romania's macroeconomic policy), we will have to rethink our monetary policy - since the RON's fluctuation will be one of the factors considered when judging whether Romania is prepared to enter the eurozone or not," says Daianu.

Ionut Dumitru, head of Raiffeisen's research department, says the effectiveness of the inflation-targeting programme is being internationally tested, due to the unprecedented amplitude of shocks experienced on the market, in the form of price increases for food and ra