Central Bank sees small negative output gap, to last some time - Nabiullina
MOSCOW. July 12 (Interfax) - The Central Bank sees a small gap between potential and actual output, which could last for a certain period of time.
"There was a small negative gap in output in the first half of the year," Central Bank head Elvira Nabiullina told reporters.
"Signs of a drop in capacity utilization and a small increase in seasonally adjusted unemployment emerged in the second quarter. The Central Bank estimates the small output gap will persist for a year, which means the absence of inflationary pressure on the part of demand," Nabiullina said.
The absence of a gap between potential and real output is the Central Bank's main argument in the dispute with advocates of rate cuts. But ever since its March rate-setting meeting, the phrase "gross output remains close to its potential level" has been omitted from Central Bank commentaries. Even so, the Central Bank did not change its rates that month, or in April or in July. Alexei Ulyukayev, a former Central Bank first deputy chairman, has said the omission of the phrase from rate-decision commentaries has indicated a lack of certainty over the preservation of the balance between potential and real output.