The Governor of the Bank of Russia Elvira Nabiullina warned about the risk of getting stuck at the level of inflation of 6-7%, which it called “completely unacceptable” from the point of view of investment growth. Speaking at the Collegium of the Ministry of Finance, the Governor of the Bank of Russia Elvira Nabiullina said that the Central Bank is concerned about the problem of retaining inflation “persistently low” level.
“Because low inflation will not be low long-term rates in the economy and predictability of business environment, critical for economic growth,” she explained. Nabiullina recalled that the latest data show a decline in annual inflation to 7.2%, which is almost half compared to the same period in 2015. And though it is “closer” to the goal to get to the end of the year at the level of 4%, the head of the Central Bank urged “not to relax”.
“The fact that we are now entering the level, familiar to 2014, we should not allow ourselves to relax. And we should not lose vigilance because there is a risk that we get stuck at the level of 6-7%,” — said Nabiullina. “Someone can this inflation seem to be reasonable. In my opinion, it is absolutely not acceptable,” she added.
Nabiullina also said the Finance Ministry is trying to return to a three-year budgetary planning. “We welcome the commitment of the Ministry of Finance to increase the budget deficit and return to a three-year budgetary planning, because uncertainty budget strategy is a significant Pro-inflationary factor,” she said.
In early April, Nabiullina said that the Bank of Russia intends to reduce the key rate, taking into account the price growth factor. “We should not allow the situation when we bet will reduce, and inflation will grow,” she said.
According to Rosstat, with the beginning of the year inflation was 2%, at an annual rate of 7.2%.
In 2015 the growth of consumer prices was 12.9%. Annual inflation is less than 7% was last recorded in March 2014 to a sharp fall in oil prices and the imposition of economic sanctions.
