INSUBCONTINENT EXCLUSIVE:
Russia reiterates inflation targeting commitment despite shocks, says INGThe Central Bank of Russia (CBR), in its first scheduled meeting
since its attack on Ukraine, kept its key rate on hold at a steep 20 per cent on Friday, citing inflationary risks and added that fiscal
expansion is a tool to support the economy if the need be.In an emergence move shortly after what Moscow calls "a special operation in
key controls to help financial stability."The Bank of Russia kept the key rate at 20 per cent, citing inflationary risks and pointing at the
budget as the tool to support economic growth
Combined with the president's support to Ms
(Elvira Sakhipzadovna) Nabiullina's reappointment as CBR governor and his warning against direct price controls or monetary emission,
Russia's commitment to inflation targeting seems to be intact," said Dmitry Dolgin, Chief Economist for Russia at ING."Today's decision to
keep the key rate at 20 per cent is unsurprising and in line with our expectations, as the emergency hike two weeks ago was pre-emptive
A further increase in the key rate now would have signalled additional nervousness to the market, while a cut would contradict the logic of
inflation targeting," he added.The Russian central bank, in its statement, said the emergency increase in its key rate to more than double
had "helped sustain financial stability" but cautioned that the economy was undergoing a "large-scale structural transformation."The CBR
fiscal easing to be the main tool of economic support in the coming months," said ING's Mr Dolgin."While the central bank's statement lacks
any detailed quantitive assessment of the economic situation in Russia, we believe the text generally implies CBR's agreement with the
consensus forecast of analysts polled by the CBR on March 10
The results of the poll suggest 2022 CPI of 20 per cent, unchanged key rate till the year-end, 8 per cent GDP drop amid 10 per cent drop in
real wages, followed by an 'L-shaped' recovery, USDRUB (rouble) of around $110 with further depreciation," he said.In addition to
geopolitics and monetary policy, "the important factors to watch on the Russian economy going forward include the current account, capital
