Staff of Reuters 3 minutes Read this article (Adds detail) (Reuters) – MOSCOW, June 30 (Reuters) – Governor Elvira Nabiullina said on Wednesday that the Russian central bank expects to reassess its monetary policy this year because the market development level on which its 4% inflation objective is based has changed over the last five years. The central bank’s remarks on inflation and monetary policy will be scrutinized ahead of a board meeting on July 23, when the bank is largely expected to raise its benchmark interest rate for the fourth time this year. Nabiullina stated at an online finance conference that Russia had set its inflation target at a specific number rather than a range because it was concerned that inflationary expectations would otherwise stick to the range’s top limit. “The target level, in our opinion, matched the market development level,” Nabiullina added, “but it has altered over time.” The central bank has stated repeatedly that it has no plans to modify the 4% inflation target in the near future. The Bank of Russia is battling to keep consumer inflation under control, which soared beyond the target in November, surpassed 6% in June, and shows no signs of abating. Inflation is a touchy subject in Russia ahead of a parliamentary election in September, as it eats into real incomes that have already been impacted by the COVID-19 outbreak. To battle price inflation, the central bank has hiked its main rate three times this year, most recently to 5.5 percent earlier this month, and has threatened to boost it again. On Wednesday, Nabiullina said the central bank’s monetary policy reaction was necessary to avoid an inflationary cycle in Russia, where the economy has already recovered to pre-pandemic levels. Nabiullina said earlier this week that the bank will consider boosting its benchmark rate by 25 to 100 basis points in July. Higher interest rates help to control inflation by making borrowing more expensive and bank savings more appealing. Tight monetary policy, on the other hand, limits economic growth. Elena Fabrichnaya, Andrey Ostroukh, and Alexander Marrow contributed reporting; Toby Chopra and Alex Richardson edited the piece.) Continue reading
UPDATE 1-Russia’s cenbank to hold monetary policy review in 2021 amid high inflation
2021-06-30T09:36:01-04:00June 30th, 2021|
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