Stabilization of inflation expectations at high level might delay inflation slowdown - Nabiullina
MOSCOW. June 15 (Interfax) - The decline in inflationary expectation has slowed of late, and their stabilization at current high levels might delay further slowing of inflation, Central Bank Governor Elvira Nabiullina said at a press conference on Monday.
"Although current inflation is dropping rapidly, stabilization of inflation expectations at current high levels could slow further declines in the rate. Steady slowing of inflation can only happen on the basis of declining inflation expectations," she said.
"Our citizens and businesses reach decisions on whether to invest or save based on what they think inflation will be. If in their view inflation will be not 7%, as we forecast [in June 2016] but 11%, then they are unlikely to deposit their money with banks at very low deposit rates," she said.
Nor will companies borrow at rates that do not correspond to their inflationary expectations, she said.
"It's great that we have stopped looking at past inflation and are looking at future inflation...for us it is crucial right now to buck the trend in inflationary expectations. This is a key element that we'll be looking at from the point of view of our key rate," Nabiullina said.