CBR analysts again signal need to maintain tight monetary policy for extended period

MOSCOW. March 13 (Interfax) - Tight monetary policy needs to be maintained for an extended period in order to sustainably reduce inflationary pressure and reach the inflation target this year, the Central Bank of Russia's (CBR) research and forecasting department said in a bulletin on current trends.

"It should be noted that given a sustainable reduction of inflation and inflation expectations, the achieved tightness of monetary conditions (meaning the constancy of real interest rates and the credit activity that these rates ensure) can be maintained with a gradually decreasing key rate," the CBR analysts said.

The CBR left its key interest rate at 16% in February. It reiterated at the time that tight monetary conditions need to be maintained for an extended period in order to bring inflation back down to the target level.

Inflation will slow to 4-4.5% in 2024 and stay around 4% thereafter, the CBR forecast.

The inflationary backdrop might remain heightened for some time and the disinflation process might be more protracted, everything else being equal, the CBR analysts said. They expect the growth of consumer demand and spending to continue to exceed the growth of household savings thanks to the rapid growth of real wages and incomes amid the shortage of workers in the economy.

The CBR forecasting department expects that, with price growth remaining high in the coming months, annual inflation will continue to accelerate until the middle of the year due to the effect of the base.