7 Apr 2021 12:06

Increased inflation pressure temporary in opinion of many countries, CBR more cautious in this regard - Nabiullina

MOSCOW. April 7 (Interfax) - Growth of inflation pressure is temporary in the opinion of many countries but the Central Bank of Russia approaches this issue more cautiously and sees potential risks, CBR Governor Elvira Nabiullina said at the Exchange Forum on Wednesday.

"Increased inflation pressure is evident in the world. This is reflected both in prices for food products, which are relayed to us, and commodities in general. But what is very important is that many countries say this increased inflation pressure is temporary," Nabiullina said. She said many countries considered the growth of inflation pressure to be temporary as the restrictions on production causing it would be lifted and the savings overhang would be exhausted.

"We approach this more cautiously. Because we agree that an accommodative credit policy and the accommodative fiscal policy, which still continues, they will be the source of this increased inflation pressure," Nabiullina said.

"We see that the global economy is recovering faster than expected, and the IMF is improving forecasts - before it was only worsening them, but now it is improving them. Of course, the risk arises when it turns out the inflation pressure is not temporary," she said.

Nabiullina said that then the United States Federal Reserve would start to increase rates more quickly than markets expected and had been relayed to them, which could accordingly cause capital outflows from countries with emerging markets, including Russia. At the same time, the Fed Reserve could react more restrainedly to increased inflation, but then the unravelling inflation spiral could lead to a large rate increase in the long term. "By this time, the imbalances will be greater still, because at this point capital inflow will continue - to the same emerging markets - and the debt bubble will simply grow," she said.

"Here, of course, there are risks, and in our view, this is the very factor causing us to approach the macroeconomic construction that exists really very carefully," Nabiullina said.