Ignatyev hopes Russian inflation will not exceed 5.5% in H1, 1.5% in H2
ST. PETERSBURG. May 26 (Interfax) - The inflation rate in Russia should not exceed 5.5% in the first half of the year, and 1.5% in the second half, Russian Central Bank Chairman Sergei Ignatyev said.
"I hope that in the first half, from December to June, inflation will be lower than 5.5%, and in the second half, from July to December, if a normal harvest is gathered, I think that it will unlikely stand at more than 1.5%," Ignatyev said at a banking conference in St. Petersburg.
The Russian government's forecast is that inflation will stand at 6%-7% in 2011, he said.
"We have not changed this forecast and are not going to do it," he said.
The CB is stiffening its monetary-lending policy in the battle against inflation, Ignatyev said. Since the end of last year, the bank has raised interest rates and provision standards several times.
"We are trying to do this cautiously, so as to not inflict harm on economic growth," he said.
Exchange-rate policy plays a large role in reducing inflation, and the CB is making the ruble exchange rate more and more flexible, Ignatyev said. The upshot of these moves is the creation of monetary conditions for lowering inflation, particularly in the appreciable reduction of the money supply.
The annual growth rate of M2 money supply - defined as total cash in circulation (outside banks) and balances in the domestic currency on accounts of resident non-financial organizations, financial organizations (except for credit organizations) and individuals - was 36% as of September 1 last year, 31% on the first of this year, and 23% on May 20, Ignatyev said.
"If it was possible to talk about excess ruble liquidity at the beginning of the year, that is not being done now. I would say that there is really no excess liquidity in the banking system," he said.
According to Central Bank figures, the money supply totaled 19.787 trillion rubles on April 1.
As reported, official Central Bank statistics show that Russia's money supply in national definition increased 1.3% over the month of March to 19.787 trillion rubles from 19.531 trillion rubles.
Money supply decreased 1.1% over the first quarter from 20.012 trillion rubles.
M0 cash supply increased 0.4% to 4.916 trillion rubles in March from 4.893 trillion rubles (2.9% from 5.063 trillion rubles over Jan-Mar).
Non-cash funds increased 1.6% in March to 14.871 trillion rubles from 14.639 trillion rubles (down 0.52% from 14.949 trillion rubles over Jan-Mar).