Report: Cbanker: Inappropriate to speak about deflation in Russia

MOSCOW, Jul 11 (PRIME) -- Speaking about deflation is inappropriate because of high inflationary expectations and money supply growing at rates close to their highest in many years, Alexei Zabotkin, head of the monetary policy department of the central bank, said as broadcasted by RBC television channel on Monday.

“It is inappropriate to speak about deflation in Russia. Two prerequisites are necessary in the economy for an obvious deflation trend. The first one is very low inflationary expectations, which make the people and the business expect a further fall in prices and reduce demand,” he said.

“In our current situation inflationary expectations rise significantly as a result of this spring’s events.”

The second prerequisite is a nearly absence of growth of money supply, according to Zabotkin.

“We have nothing of the kind. Money supply increased by 16.2% in year-on-year terms in May, which is very far from zero. Moreover, the indicator is close to the highest for the entire targeting period since 2014,” he said.

The Federal State Statistics Service registered deflation of 0.35% in June.

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