MOSCOW, September 22. /TASS/. The authorities should reduce inflation and inflationary expectations in Russia as soon as possible, head of the Bank of Russia Elvira Nabiullina said speaking at the Federation Council, the upper chamber of parliament.

"When people expect inflation to rise, they start spending more, save less, fearing that money will depreciate, make large purchases even on credit, expecting that the goods they need will rise in price. This in itself pushes inflation up. Therefore, we must definitely reduce inflation and inflation expectations as soon as possible," she said.

While many countries are now considering inflation as a temporary phenomenon and waiting for the end of the surge in inflation, Russia cannot afford it, Nabiullina said.

The head of the regulator recalled that the annual inflation in Russia will return to the level of 4-4.5% in the second half of 2022.

Recovery from the pandemic crisis

Nabiullina also pointed at the fact that the rapid economic recovery has some side effects that must be dealt with for the sake of the stability of the financial system.

"Rapid recovery growth is the best we could hope for, but it has some side effects that we must fight for the sustainability of our financial system and economy and, ultimately, the well-being of our citizens," she said.

According to Nabiullina, the Russian economy has almost completely recovered from the pandemic crisis.

"We have passed this difficult stage with minimal losses, first the acute phase of the crisis, and then recovery. Of course, a great contribution was made by the government’s budgetary support, and the very efficient work of lawmakers, which created the legal conditions for the implementation of anti-crisis measures and for curbing further risks. For our part, we pursued a soft monetary policy and, only after making sure that the economic recovery is sustainable, we began to raise the [key] rate," the head of the regulator said.

Earlier this month, the Bank of Russia again raised its key rate - by 0.25 percentage points to 6.75%. The regulator noted that it holds open the prospect of further key rate rises at its upcoming meetings.