– By high inflationand economic growth cannot be sustainable, said Nabiullina, quoted by the independent website “The Moscow Times”. She added that “it is a dangerous illusion to think that with increased inflation you can reliably stay in a certain zone.”
– This is why We don't plan to cut cornersapproaching our (inflation – ed.) target of 4%. – she emphasized. R's bossOssian Central Bank she argued in favour restrictive monetary policy as “an inevitable reaction to what is happening in the economy.”
Russia is getting ready to tighten its belt. “More drastic changes”
Last Friday, the Russian Central Bank announced that the price increase in September was 9.8%. year to yearcompared to 7.5 percent in August. In the same period core inflation increased to 9.1%. with 7.7 percent The bank authorities also updated annual inflation forecast to 8-8.5 percent. by the end of 2024 The result of the correction is much higher than the previous forecast of inflation in Russia for this year (6.5-7%).
– Under current conditions restrictive monetary policy does not contradict all economic development tasks that the government is currently working on, Nabiullina said.
The war in Ukraine and inflation in Russia
Russia has been struggling with inflation since its dictator began Vladimir Putin full-scale invasion of Ukrainewhich caused an avalanche Western sanctionsto which Moscow had to respond. Russia is also seeing a sharp increase in defense spending because increases weapons production needed for the war against Kiev.
According to Nabiullina, interest rates remain a powerful instrument in its toolkit, but, as she emphasized, current Russian economic conditions may require it “more drastic changes to make it work.” Analysts warn that Russia may be entering a period “inflation without growth” and that the local economy is simultaneously approaching stagflation (inflation combined with low growth and/or economic slowdown).
Source: The Moscow Times