Still-high inflationary expectations a monetary policy constraint - Yudayeva
SOCHI. Oct 5 (Interfax) - Persistently high inflationary expectations are constraining the Central Bank's monetary policy, the bank's first deputy governor, Ksenia Yudayeva, said during the investment forum in Sochi on Saturday.
"I think the main problem for the Central Bank's policy right now is the still-high inflationary expectations. The surge we had at the beginning of the year elevated all inflationary expectations. Yes, these stopped rising, they are now under control, but they are hardly easing at all, and in certain months they even rise for certain periods. This is certainly a constraining factor for our monetary policy. We must take the situation with inflationary expectations into consideration, and ensure that they are lowered gradually," Yudayeva said.
"Our transition to inflationary targeting has coincided with other, fairly significant events: the end, as it is customary to say, of the oil super-cycle, and geopolitical factors at the dame time. All this has created additional volatility and tension in the financial markets," she said.
Yudayeva said the economy and the markets were adapting to a new level of oil prices, and to a floating ruble, and the exchange rate's carry-over effect on inflation is easing.
Current inflation is starting to slow, although continuing volatility in the markets and uncertainty over long-term indicators, in particular oil prices, is keeping the volatility of inflation at a fairly high level," she said.
The Central Bank still thinks it will be able to achieve its inflation target of 4% by 2017. "In order to achieve this, we need to have the corresponding monetary policy. But the economy will adapt to the new conditions more quickly if monetary policy is coordinated with the policy to index natural monopoly tariffs and budgetary policy," Yudayeva said.
