strict monetary policy needs to be maintained for a few more quarters – Kommersant

Bank of Russia Governor Elvira Nabiullina said that the country passed the peak of inflationary pressure in the third quarter of 2023. According to her forecast, annual inflation will begin to decline in the spring of 2024. However, to return inflation to the 4% target, tight monetary policy (MOP) will need to be maintained for several quarters in 2024.

As the head of the Central Bank noted, the situation with the ruble exchange rate reflects the overheating of domestic demand. The summer weakening of the ruble, she said, “reflected persistent domestic inflationary pressure.”

“The growth rate of lending will slow down due to strict monetary policy, but I would like to emphasize that next year, according to our forecast, the pace of lending will remain positive, that is, it will continue to contribute to the development of the economy,” Ms. Nabiullina said during a joint meeting of State Duma committees on the financial market, on the budget and taxes and on economic policy (quote from TASS).

According to Elvira Nabiullina, if the Central Bank “looses its grip, it will gain nothing.” The head of the Bank of Russia believes that in this case, inflation will still have to be reduced, but from a higher level. “And the price of this – both high inflation and efforts to restore price stability – will be much higher for the economy as a whole – both for business and for our citizens,” the head of the regulator clarified.

She emphasized that it is necessary to reduce the key rate on the basis of low inflation, since otherwise it will be impossible to attract “long-term money” to the economy. “We need long-term money. And they can be quite cheap not because our key rate is low, but when inflation is low. Because even if, suppose, we lowered the key rate, and inflation remained high, the banks would not give long-term money,” added the Central Bank Chairman.

Alexander Kislov