Together with the RANEPA, Gaidar Institute has Prepared Comments on the Draft Main Guidelines of the Unified Monetary Policy in 2016 and the 2017-2018 Period
Generally, analysts of Gaidar Institute and the RANEPA believe that the strategic course of the monetary policy of the Central Bank of Russia is a correct one. Inflation targeting with a free floating exchange rate is the most up-to-date monetary policy regime which many countries along with a majority of developed ones stick to.
At the same time, experts do not think that intentions of the Central Bank of Russia to replenish international reserves were justified as the practice of replenishment of the reserves in 2015 can hardly be recognized as a successful one because it took place after provision of considerable volumes of foreign exchange funding to the banking sector. In other words, the Central Bank of Russia first exercised higher pressure on the exchange rate of the ruble providing foreign exchange liquidity to banks and then started to buy foreign currency. In the forthcoming years, replenishment of international reserves may destabilize the situation on the foreign exchange market and that may result in a new surge in the rate of inflation; the above will call into question the achievement by the Central Bank of Russia of the main objective as regards the rate of inflation.
Also, the authors of the comments and the Central Bank of Russia differ in their forecasts of the rate of inflation. According to the baseline scenario of the forecast of the Central Bank of Russia, in 2016 the inflation rate is going to be within the range of 5.5%–6.5%, while by 2017 it falls to the target level of 4%. However, even with the above factors restraining growth in prices taken into account it is hardly feasible to ensure reduction of the level of the inflation rate to the specified values without highly painful toughening of the monetary policy. Inflationary processes in Russia are of a rather inertial nature, so, it would be more justified to forecast the level of the inflation rate within the range of 6%-8% and 5%-7% in 2016 and 2017, respectively, within the frameworks of the baseline inertial scenario.
According to experts, the Guidelines should take into account the risk of a crisis of bad debts in a situation of medium high rates. It remains unclear whether the regulator believes that the instruments it used in the past year and a half are sufficient enough for coping with possible crisis phenomena.
Tuesday, 10.11.2015