Russia not at risk for stagflation amid 'substantiated monetary policy'; this usually occurs amid soft monetary policy - Nabiullina

MOSCOW. Nov 19 (Interfax) - Soft monetary policy usually causes the economy to experience stagflation, and there is no risk of stagflation occurring in Russia amid a substantiated monetary policy, Central Bank of Russia Governor Elvira Nabiullina told the State Duma.

"What is stagflation? Stagflation is a long period of low economic growth rates combined with high inflation lasting several years," Nabiullina said in response to the question from parliamentary members regarding several analysts forecasting stagflation in Russia amid the currently high interest rates.

"The reasons [for stagflation] occur when the economy reaches the limits of its production capabilities, though demand continues to be stimulated at the same time. The entire stimulus from demand goes into inflation. This even suppresses investment demand by the way. In essence - and other countries that have experienced stagflation had this - this results from unsubstantiated soft monetary policy, when it needs to be tightened," Nabiullina said regarding the reasons for stagflation occurring.

"In my opinion, the concerns being expressed that hawkish monetary policy would suppress demand and inflation would grow are unfounded in this sense," she said.

"How could we assess the risk of stagflation [in Russia]? In my opinion, we do not have this risk if we conduct a timely, substantiated monetary policy that removes these risks. We are pursuing this policy," Nabiullina said.