Trajectory of inflation returning to target more important than lending dynamics alone - Central Bank of Russia

PERM. Dec 4 (Interfax) - The Central Bank of Russia takes into account lending data when reaching monetary policy decisions, though the dynamics are less important than the correlation with the trajectory of inflation returning to the 4% target, Andrei Gangan, director of the monetary policy department at the Central Bank of Russia, said.

"The Central Bank of Russia monitors lending dynamics, and, of course, this is one of the important indicators reflecting the situation in the economy and the transmission dynamics. Ultimately, the Central Bank does not specifically target lending, the amount of lending, or the growth rate. The Central Bank targets inflation," Gangan told Interfax on the sidelines of a communications session in Perm in response to a question about whether the Central Bank is concerned about accelerated corporate lending in October and whether this would hinder a key rate cut in December.

"Lending dynamics could be higher or lower [than forecasts]. The main factor is that there is an appropriate inflation trajectory, so that it returns us to the target," Gangan said.

As previously reported, the growth rate in corporate lending in Russia accelerated to 2.6% in October from 0.6% the previous month.

The Central Bank generally believes that lending has grown rather moderately since the beginning of 2025 compared to previous periods.

"The important factor is that lending is growing. It is not as though we have stopped and that is it; that banks are not lending money to anyone; and that no one is showing demand for lending. It still exists, there is demand, though it is more moderate, more in line with the equilibrium levels that would lead to normal inflation levels," Gangan said at the communication session.

The Central Bank is not yet ready to update its 2025 inflation forecast from 6.5%-7%, as it has not received all the data.

"New data are coming in that could adjust our view. If it is adjusted, we would only be able to announce it at the December decision, on December 19 [the regulator's meeting on the key rate], because the full statistics for November will not be available for some time," Gangan told Interfax.

The regulator is also not yet disclosing possible rate decisions for December.

"The Central Bank has been gathering all the information necessary for the decision, meaning that right up until Friday, the day of the board's decision, we will be analyzing everything and assessing how the incoming data compare to our updated forecasts and the key rate trajectory, which takes us to 4% [inflation]. Accordingly, the situation could change before then, and it could change quickly. We will have more updated data in the coming weeks, including full inflation data for November. We will have data on lending. All of this could affect the decision," Gangan said.