Chairwoman: Cbank to switch to neutral monetary policy in 2022

MOSCOW, Nov 25 (PRIME) -- The central bank will start switching to a neutral monetary policy in 2022 if Russia’s economy recovers in line with the baseline scenario, Chairwoman Elvira Nabiullina said on Wednesday at a meeting of the State Duma, the parliament’s lower house.

“We will track development of the situation. Right now, we forecast in the baseline scenario that the (monetary) policy will remain soft in 2021. If the economy recovers in line with the baseline scenario, we will start switching to a neutral policy somewhere in the middle of this three-year cycle,” she said.

The authority still has some room for reduction of its key rate, which currently stands at 4.25% annually.

“We have all capabilities of doing a normal monetary policy, our rates are far from zero, and we have opportunities speaking about the room for reduction of interest rates,” she said when asked whether the regulator is ready to help the government by buying sovereign bonds.

The law prohibits the central bank from covering the federal budget deficit, and Russia’s budget is rather stable on its own. “The budget is capable of raising financing at market conditions if it is necessary. There is absolutely no necessity of using any instruments of the central bank that will have long-term inflationary consequences and consequences of other types,” she said.

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