Russian Central Bank still expects inflation to be back on target in Q4
ST. PETERSBURG. June 20 (Interfax) - The Central Bank of Russia still expects annualized inflation to revert to its target band of 5%-6% in the fourth quarter of 2013, CB First Deputy Chairman Alexei Ulyukayev told reporters on the sidelines of the St Petersburg Economic Forum.
"We expect to be in the target [band] of not more than 6% in Q4," Ulyukayev said.
Ulyukayev said this was one of the justifications for easing monetary policy. "And it is one of the grounds for thinking that way [of lowering interest rates]," he said.
Ulyukayev said there were quite a few other circumstances that affect monetary-policy decision-making.
"I'm talking in general about the situation, about out approach to it. We won't be discussing any concrete positions on the refinancing rate right now. This calls for a separate discussion in the framework of the Central Bank," he said.
He added later that decisions in the field of monetary-lending policy affect inflation with a lag of from six to twelve months. "Most likely, we did not do it, we cannot influence inflation in the current year, we can influence next year's inflation. The sense in this becomes that it is not as important, what it is today as what kind of expectations there are relating to the future," he said.
A decision to reduce rates might be made before inflation returns to the target range of 5%-6% of the year, Ulyukayev said. He reiterated that the regulator, when making decisions regarding monetary-lending policy, considers all the aggregate factors: inflation and its structure, local and world inflation, economic growth, employment, the state of the balance of payments, and so on. "Definitely, it is possible that even not being in our target corridor [for inflation], we can decide to lower rats. We think that we will return to the corridor something in the fourth quarter of this year. The making of a decision may not necessarily be driven by this," he said.
Ulyukayev said he thought inflation might fall to 7% in annual terms at the beginning of July.
Ulyukayev also said that the absence in Central Bank commentaries following rate-setting meetings by its board of the phase about real output corresponding to potential output pointed to uncertainty over whether that balance would be preserved.
"Maybe some sort of balance will be preserved, maybe not. Our various analytical departments give various information. We can't say with certainty that there won't be a balance, so we remove this phrase [from commentaries]," he said.
