MOSCOW, November 7. /TASS/. The Bank of Russia has effective tools to reduce inflation to the target of 4%, and will be ready to raise the key rate for this purpose, the regulator’s Governor Elvira Nabiullina said.
"The Bank of Russia has effective tools for reducing inflation towards the target. At recent meetings, we raised the key rate with tangible steps and will be ready to do this again if we do not see signs of a sustainable slowdown in inflation and cooling of inflation expectations," she was quoted in the report on the monetary policy of the Bank of Russia.
According to Nabiullina, there is currently inflation due to an internal supply and demand imbalance. Demand is increasing, but supply growth is constrained, hence price growth is escalating.
She also recalled that the Bank if Russia raised the trajectory of the key rate for 2023 to 15-15.2% in its new projection, and that the average rate for next year will be 12.5-14.5%. "This rate path will allow inflation to return to target by the end of next year and then stabilize at 4% in the future," the regulator said.
The Bank of Russia also noted in its report that government measures on the mandatory sale of foreign currency earnings by exporters have somewhat lowered the volatility of the ruble exchange rate. According to the regulator, the exchange rate is still dictated by the situation with foreign trade - smaller quantities of export profits are received with increased demand for imports compared to the beginning of the year.
"The situation on the global financial markets has a certain impact on the market, which leads to an increase in demand for dollar assets from international investors," the regulator said.
On October 11, 2023, the Russian government announced that, in order to stabilize the exchange rate, the sale of foreign currency earnings for a six-month term will be implemented for 43 groups of companies. As a result, beginning October 16, individual Russian exporters must credit at least 80% of all foreign currency received in accordance with the conditions of their export contracts to their accounts in Russian banks within 60 days of receiving funds.