Cbanker sees effects from low inflation felt most in 2–3 years

ST. PETERSBURG, Jun 1 (PRIME) -- Effects from low inflation will be felt the most in two–three years, in particular, loans will become affordable, the central bank’s Chairwoman Elvira Nabiullina said at the St. Petersburg International Economic Forum on Thursday.

Despite the fact that inflation has seriously fallen, we do not think that we have achieved our goal. Because our goal is not to receive 4% (inflation) in one or two months, but ensure medium-term stability of low inflation. And we will be able to say that we have achieved stable low inflation in two–three years, when we manage to ensure it. I think that positive effects from low inflation will be the most pronounced in two–three years,” she said.  

“Interest rates will decrease, loans will become more affordable,” she added.

Low inflation does not create economic growth on its own, but can help it, Nabiullina said.

“Low inflation, it does not create economic growth on its own, we all understand it quite well. But low inflation along with the agenda of energy structural reforms with that agenda investors believe in can certainly help the economic growth, and I also estimate that in this case growth can be 3–3.5% or 4% if the agenda of structural reforms is very powerful. And now we estimate the potential ceiling at around 1.5–2%,” she said.

Growth of oil prices and strengthening of the ruble have encouraged slowdown of inflation, that’s why the central bank does not hurry to ease its monetary policy, she also said.

“And we understand that oil price dynamics can be very different – they (oil prices) may further grow, may remain at the same level and may fall. We understand concerns of market participants what will happen if oil prices fall, if the central bank raises rates again then. And predictability of rates is very important for business,” she said.

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