Government, CBR must coordinate actions in combatting inflation - Putin
NOVO-OGAREVO. July 27 (Interfax) - The Russian government and Central Bank of Russia (CBR) should coordinate actions to combat inflation, which has significantly exceeded the target, Russian President Vladimir Putin said.
Opening a meeting on economic issues on Tuesday, he noted the role of external factors in Russia's inflationary processes.
"Say, in the United States, inflation has exceeded 5 percent, although I think their target was somewhere around two, and for two years in a row they have been drawing up a budget with a deficit of 15 percent. Two years in a row, and this deficit is paid for with what? Emissions. That's where inflation comes from. Certainly, it affects the entire global economy, bearing in mind the importance of the U.S. [economy] for the entire world and the importance of the dollar as the largest, most sought-after reserve currency," Putin said.
"U.S. inflation exceeded 5%, let's say, although I think their target was somewhere around two, and for two years in a row they have been drawing up a budget with a deficit of 15%. Two years in a row, and this deficit is paid for with what? By issuing money. That's where inflation comes from. Certainly, it affects the entire global economy, bearing in mind the importance of the U.S. [economy] for the entire world and the importance of the dollar as the largest, most sought-after reserve currency," Putin said.
"In our country, the fairly rapid recovery of key sectors of the national economy, the labor market, as well as abroad - we just touched on the U.S. - is also accompanied by rising inflation, which is not so significant, but still beyond our target benchmarks," the president said.
Annual inflation in Russia, as of last week, stood at 6.5% compared to a target of 4%. The Central Bank began a cycle of monetary policy tightening in March to slow accelerating inflation, and last Friday took the most aggressive step in this cycle: it raised its key rate by 100 basis points at once, to 6.5%.
"The government and the Central Bank are reacting accordingly, both at the level of macroeconomic actions and sectoral regulation. It is important that all the steps we are taking are - I want to stress this once again - coordinated, verified, and balanced. I am confident that this is how we will act," Putin said, opening the meeting.