Russian inflation in 2022-2023 will be higher than previous estimates, CBR won't let it spiral - Nabiullina
MOSCOW. March 18 (Interfax) - Inflation in Russia will be higher than previous estimates in 2022 and 2023 but the Central Bank will not allow it to spiral, Central Bank Governor Elvira Nabiullina said in a statement following Friday's meeting of the Central Bank of board of directors.
"Relative price adjustments cannot happen all at once. This means that inflation will remain elevated for some time, but we will not allow inflation to spiral," she said.
"It is currently very difficult to give specific figures for the forecast. Inflation this year and, most likely, next year will be higher than previous estimates. GDP will decline in the next quarters," she said.
The Central Bank plans to unveil its new macroeconomic forecast at a pivotal meeting on April 29, she said.
"The key uncertainty is external trade conditions amid increased sanctions pressure," she said.
The Central Bank' current official forecast, made at the beginning of February, is for 5%-6% inflation in 2022 and 4% in 2023.
Analysts polled by the Central Bank in early March expect that inflation reach 20% in 2022, and GDP could fall by 8%. The survey was conducted from March 1-9 and the data was published on March 10.
Banking system operating smoothly
The liquidity situation in the Russian banking sector has stabilized, with the volume of funds provided by the regulator to credit institutions reaching 10 trillion rubles at the peak,Nabiullina said.
"The banking system is working smoothly. The liquidity situation has stabilized. We are providing the banks with the necessary funds in full. At the peak, the volume of provided liquidity reached 10 trillion rubles," she said.
Nabiullina stressed that the structural liquidity deficit of 7 trillion rubles that arose in early March has more than halved by now.
"At the end of February, banks experienced a large-scale outflow of ruble funds from the accounts of the population, but in the last two weeks, this money has been returned to time deposits," Nabiullina said. According to her, the key role in this process was played by the increase in the CBR's key rate at the end of February from 9.5% per annum to 20% pa.
The CBR expects a slowdown in lending in the future amid rising rates. "As for lending, growth has continued in recent weeks, but most likely this is owing to the use of previously approved credit limits. In the future, we expect a weakening of lending activity," Nabiullina said.
"The increase in rates is a temporary anti-crisis measure, when the situation stabilizes enough, and rates will decrease on the situation has stabilized," Nabiullina said.