Ratnik combat gear enters service, delivery to army beginsMilitary & Defense August 23, 11:16
Arson sparked massive fire in Russia's Rostov-on Don— sourceSociety & Culture August 23, 9:23
US visa suspension move tramples on idea of freedom — senior Russian diplomatRussian Politics & Diplomacy August 23, 6:19
Bout barred from calling out of US jail, meeting relatives for 2 months - lawyerWorld August 23, 4:57
Russia marking day of defeat of Nazi forces in world’s biggest-ever armor operationSociety & Culture August 23, 3:18
Ukrainian president briefs other Normandy Four leaders about his trip to DonbassWorld August 23, 2:23
Normandy Four leaders support expected ceasefire in Ukraine — KremlinRussian Politics & Diplomacy August 23, 0:27
Russia beginning development of response to new anti-Russian sanctions by USRussian Politics & Diplomacy August 22, 23:14
Investigators claim to have enough evidence to prove Serebrennikov guilty of fraudRussian Politics & Diplomacy August 22, 21:35
MOSCOW, June 16. /TASS/. The strategic objective of the Russian Central Bank is to maintain low inflation in the long term, Head of the regulator Elvira Nabiullina said at the St. Petersburg International Economic Forum (SPIEF 2016).
"From the point of view of monetary policy, our key tactical task is to fulfill the promise we made to people, and to achieve the inflation target of 4% by the end of next year," she said, adding "the strategic goal of the monetary policy is to maintain a low level of inflation in the long term.".
Current inflation level forces Russia to lose competition for investment, Nabiullina said.
The Russian economy adapted to external challenges faster than expected, Nabiullina added.
"Indeed, the economy, in our view, has adapted to external challenges that we have seen much more quickly than many expected, than we expected," she said.
According to Central Bank head, economic growth in Russia is more likely to be prevented by structural limitations and not by the Central Bank’s rate.
"In our opinion, the economic dynamics is now hampered by structural restrictions and not by our interest rates," she said.
The rates in the economy will decline as inflation becomes slower, Nabiullina added.
According to the official the key rate will not lose its role when transitioning to the liquidity surplus.
Banks will gradually lower deposit and then loan rates when transitioning to the structural surplus, she added.
"The banks are said not to pay attention to the key rate anymore. This is absolutely not so. The key rate will largely be the target for placement of funds," Nabiullina said. The Bank of Russia will not lose control over the money market rates, she added.
Banks should focus more on lending to small and medium-sized businesses, head of the regulator added.
"Banks, in my opinion, should be more focused on supporting small and medium-sized businesses, but nonetheless there is a potential of entering stock markets and bond market," she said.
Imbalance in the financial market
The Russian Central Bank notes an imbalance in the financial market - highly developed debt market and underdeveloped capital market.
"We see imbalances in the financial market, for example, we have a well-developed debt market, although everyone tells us to cut interest rates, we have to increase lending. Our capital market, unfortunately, is underdeveloped," Evlira Nabiullina said.
According to her the imbalance was caused by competition.
"Many sectors, not only in banking, are dominated by large players. In general, this distorts competition. Of course, gradual voluntary consolidation of the sector and the creation of more fair terms of competition will be one of our directions of activities. We believe that the financial sector must be competitive in the long run by global standards," she said.
Growth of budget deficit by each p.p. forces Central Bank to keep key rate at 1 p.p. higher, Regulator’s head also added.