MOSCOW, Jan 24 (PRIME) -- Russia’s economic recovery and lower inflation may allow the central bank to cut interest rates but fast decisions are risky because they can undermine trust in the central bank in the future, Igor Dmitriyev, director of the monetary and credit policy department, told the State Duma lower house of parliament on Tuesday.
“The economy is restoring now. We can see, and this has already been confirmed, a 5.4% inflation – a record low figure for the latest Russian history. All these opens space for lower rates and a gradual softening of the monetary policy,” he said.
The danger of hasty actions is important because if they are immature, not preceded by consolidation of the situation linked with external conditions, with inflationary expectations, this can push households to abandon a savings-focused model, a bit lower trust in the ruble.”
“The price which we can pay is erosion of trust to the central bank, higher inflationary expectations.”
He added that if the central bank cuts the rate, the economic can start growing faster, but hit a ceiling later.
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