Russian c.bank says rate hikes will return inflation to near 4% target in H2 2022
MOSCOW, Sept 22 (Reuters) - The Russian central bank's current monetary policy will bring inflation back to near its 4% target in the second half of 2022, Governor Elvira Nabiullina said on Wednesday, adding that it was important not to let rising consumer prices get out of control.
The central bank has hiked its key rate five times this year, most recently by 25 basis points this month to 6.75%, as it tries to rein in price growth.
Inflation reached an annual 6.84% in mid-September and inflationary risks increased on Tuesday after officials said Russia would spend around 2.5 trillion roubles ($34 billion) from its National Wealth Fund (NWF) in the next three years to help revive economic growth after the pandemic.
"Taking ongoing monetary policy into account, inflation will return to the 4-4.5% level in the second half of next year," Nabiullina said in a speech in the Federation Council, the upper house of parliament.
"Inflation has already accelerated to double digits in some developing countries and is not yet slowing, because tweaks to the key rate lag behind the growth in inflation expectations." Nabiullina said.
"We must reduce inflation and inflation expectations as soon as possible, without allowing an inflationary spiral to unfold," she added.
Nabiullina was more hawkish last week, when she said the central bank would consider further interest rate hikes at its upcoming board meetings.
The bank has previously warned of inflationary risks if authorities spend too freely from the NWF, which accumulates Russia's oil revenues and stood at $190.5 billion as of Sept. 1.
Nabiullina also touched on the deterioration in consumer credit standards, saying the central bank was talking to banks to highlight the social and financial stability risks of borrowers not being able to repay loans.
"Using the tools we have, we are now cooling down the market," she said. ($1 = 72.8950 roubles) (Reporting by Elena Fabrichnaya; Writing by Alexander Marrow Editing by Gareth Jones)
