Central Bank of Russia expects achieve inflation target in 2025 - Monetary Policy Department first dep chief
MOSCOW. Aug 1 (Interfax) - The Central Bank of Russia still expects to achieve its inflation target in 2025, said Andrei Gangan, first deputy director of the regulator's Monetary Policy Department.
"The Bank of Russia has a target, and this target is 4% for the year. According to our forecasts, we will achieve this target next year, in 2025, that is, prices will grow 4% in 2025," Gangan said during a live broadcast on Odnoklassniki.
"This does not mean that no product will grow by more than 4%. We cannot influence prices for individual goods any more than we can control nature and the weather, but we are trying to bring overall price growth closer to 4%," he said.
Gangan said it was bad for the economy when there was both a high price growth and a sustained drop in prices.
"Modest price growth, a moderate, predictable, understandable increase in prices - this is normal. This happens in all economies. Moderate price growth is in a sense a prerequisite for such planned, gradual, smooth and stable economic growth. When prices grow just a little from year to year, this prompts manufacturers to increase production, profits and revenues," he said.
Gangan said he was sure the Central Bank was capable of ensuring low, stable inflation. "Of course, there are one-off factors that can increase the amplitude and volatility. The basket does not consist only of housing and communal services, or only of foodstuffs. Even when such shocks occur [a surge in prices for selected goods and services] we have to understand that they are one-off. If crops fail, then prices surge, but this does not necessarily mean that in a year they will surge by the same amount," he said.
"In general, the Central Bank has the tools to ensure stable price dynamics, and next year we will definitely ensure that inflation is at our target," he said.
Gangan said raising the key rate was the most effective tool for combating price growth. In July, the Bank of Russia raised the rate to 18%, for the first time since December 2023. The regulator began the monetary tightening cycle a year ago; the rate increased from 7.5% to 16% between July and December 2023.
The Central Bank has substantially raised its inflation forecast to 6.5%-7% for 2024 from the previous expectation of 4.3%-4.8%, the regulator said following the meeting of the board of directors on July 26. The CBR also raised the inflation outlook to 4.0%-4.5% for 2025 from the previous target of 4%, expecting that annual inflation should continue to be close to 4% given the current monetary policy.
