Nabiullina reported on the persistence of pro-inflationary risks in the Russian economy

The head of the Bank of Russia, Elvira Nabiullina, said at a press conference on the key rate that the risks for the Russian economy are still shifted towards pro-inflationary ones. One of these risks remains the situation on the labor market, she said.

“Further expansion of the personnel shortage may lead to labor productivity falling further behind wage growth. This may further increase the imbalance between the dynamics of supply and demand in conditions of high utilization of production capacity and shortage of labor resources,” said Ms. Nabiullina (quoted from broadcast in YouTube).

The head of the regulator also said that it may become more difficult for the Russian economy to meet increased domestic demand through imports. For greater imports, it is necessary to increase exports, and the possibilities for increasing them are limited, she noted.

Today, March 22, the Bank of Russia decided to maintain the key rate at 16%. The Central Bank also maintained the inflation forecast for 2024 at 4–4.5%. In the press release of the regulator, in particular, it is noted that in the medium term the balance of risks for inflation remains shifted towards pro-inflationary ones. The Central Bank believes that the main risks of rising inflation are related to the conditions of foreign trade, including under the influence of geopolitical tensions, the persistence of high inflation expectations, the increasing deviation of the Russian economy upward from the trajectory of balanced growth, as well as the trajectory of normalization of fiscal policy.

Read more in the Kommersant article. “Key bet without hesitation”.

Erdni Kagaltynov