World Bank: Russian Central Bank must remain committed to inflation targeting
MOSCOW. Sept 30 (Interfax) - The Central Bank of Russia needs to maintain its policy of inflation targeting in future, the World Bank said in its latest Russia Economic Report.
"Russia's recent monetary policy actions successfully prevented costly delays in relative price adjustments," the World Bank. "To sustain progress on this front the central bank must remain committed to inflation targeting in the context of a flexible exchange-rate regime. This will continue to support timely REER adjustments," the World Bank said.
Under the baseline economic development scenario, inflation will remain in double digits in the second half of 2015, resulting in 15.5% inflation for the year. "This will limit the pace of monetary easing in 2015. Devaluation concerns are projected to wane in 2016 as oil prices stabilize, and low consumer demand is expected to slow the inflation rate to an average of 7.5 percent. In 2017, the inflation rate is expected to drop to 5 percent, in line with the central bank's medium-term target," the report says.
The baseline scenario assumes oil priced at $53 per barrel in 2015 and 2016 and $55 per barrel in 2017. Russian GDP is forecast to contract 3.8% in 2015 and 0.6% in 2016 and grow 1.5% in 2017. The average-annual exchange will be 62.3 rubles/$1 in 2015, 61.0 rubles/$1 in 2016 and 58.2 rubles/$1 in 2017.
The Central Bank allowed the ruble to float and announced the shift to inflation targeting in November 2014.
