No reason now to toughen monetary policy - Klepach
MOSCOW. Feb 18 (Interfax) - There are no compelling reasons for the Central Bank of Russia (CBR) to make monetary policy stricter at this time, Deputy Economic Development Minister Andrei Klepach said.
"I am hoping that this will not happen at this time. There are no preconditions associated with inflation for this. Because, although we and the CBR note that the decreasing ruble exchange rate will have a certain effect, at this point everything is within the price guidelines that have been established," Klepach told the press in Moscow on Tuesday.
"It is important that they [the Central Bank] don't tighten it [monetary policy] yet," Klepach said. There are several ways to tighten monetary policy, but this is usually associated with hiking the base rate, he said.
Regarding industry, which fell 0.2% in January, Klepach said the Econ Ministry "didn't expect anything good anyway [from January]." And it is due to this uncertainty regarding economic growth that the Central Bank did not opt to tighten monetary policy and put rates up this time. Klepach said the standard response by central banks when a national currency comes under pressure was to firm up monetary policy. "That's what Turkey did and that's what other countries have done, but it's not what the Central Bank [of Russia] did, in light of risks to the economy," he said.
Given the expectations about the ruble's exchange rate, Klepach said he had already said there might be a correction following its decline. "But the overall tendency is for the ruble's exchange rate to weaken somewhat until the end of this year and into next year. The main thing is for this not to undulate," he said.
