Tougher monetary policy needed to slow inflation in Russia

Tougher monetary policy needed to slow inflation in Russia

Russia needs to toughen monetary policy to slow inflation and lower inflation expectations, Central Bank Deputy Governor Alexei Zabotkin said on Wednesday, days after the bank sharply raised the key rate to curb growing prices.

“For inflation and inflationary expectations to slow down from current elevated levels ... a tougher policy is needed,” Zabotkin said.

Kirill Tremasov, a monetary policy department head at the central bank, said separately that inflation this year was likely to be closer to the upper end of the bank’s forecast of 7.4-7.9%, Reuters reported.

Last Friday, the central bank, which targets inflation at 4%, raised rates for the sixth time this year to 7.5% - a level last seen in mid-2019.

Inflationary expectations among Russian householders rose to 13.6% in October, the highest in nearly a year, while inflation climbed to 7.78% as of Oct. 18, the highest since early 2016. The central bank sees inflation next year at 4-4.5%.