Central Bank of Russia to reach 'balanced' monetary policy decisions, making resources more accessible - Siluanov
MOSCOW. Nov 25 (Interfax) - The Central Bank of Russia will reach balanced monetary policy decisions based on an analysis of inflation, money supply growth and fiscal stimulus that should ultimately make resources more accessible to the economy, Finance Minister Anton Siluanov said.
Speaking at the Financial University's "Russia: Image of the Future" forum, Siluanov recalled that the authorities have had to provide additional support to households, industry and specific sectors of the economy in recent years amid Covid and external restrictions.
"And this has been achieved through the budget. The budget deficit increased after 2020, and we have adjusted our budget principles and rules to allow for greater budget spending. This has worked, as the economy has grown over 4% in the past two years. Nevertheless, we need sustainable economic growth, independent of the recent injection, and things are moving along. We cannot continue to make these injections indefinitely, as this could risk unbalancing the financial system," Siluanov said.
The Central Bank, having seen inflation accelerate, "gave the right response by raising the key rate and began gradually taking measures to cool the economy." "And the Central Bank has powerful tools - the interest rate and economic rates. Very powerful. We see how we all feel it. The economy feels it, businesses feel it, the budget has taken on a lot of interest rate risk, and people feel it because loans have become more expensive," Siluanov said.
He said the main task now is "to go all out on balancing supply and demand." "Injections of money supply and liquidity have boosted demand, while supply has lagged, which is why the Central Bank is taking fairly active measures this year to cool the economy." "This is necessary so that next year growth can begin based on sustainable, balanced growth, without additional stimuli that would then need to be cooled and the resulting demand constrained," Siluanov said.
He said the budget for the next three years had been drawn up in such a way as to be neutral, because since 2020, the aggregate fiscal stimulus for the economy has been 17% of GDP. "There wasn't that sort of stimulus before, but the country hadn't faced such events before: Covid, industry shutdowns, the need to support our people, sanctions. These are all situations that require a fiscal response. And we responded, averting a drop in living standards, and stimulated the economy, but now we need to ensure balanced economic growth. Fiscal policy for the next three years ensures this, and the Central Bank now has more room for maneuver when making decisions on monetary easing. The government and Central Bank are working together here. The Finance Ministry and Central Bank, as monetary authorities, understand each other entirely and are communicating. And I'm confident that the Central Bank, when seeing all this, when analyzing the inflation rate, when analyzing the money supply growth rate, when analyzing and forecasting fiscal stimuli for next year and the medium term, will, accordingly, reach balanced decisions," he said.
"Such decisions will be made, borrowing and credit will become cheaper, and overall, the economy will recover, new sectors will begin to develop, previously suspended projects will continue to develop, and life will resume in a new way, and balanced and sustainable growth is important to us. This is the goal we are setting, and I am confident this goal will be achieved," Siluanov said.
