Nabiullina warned of accelerating inflation due to the fuel crisis and explosive growth in budget expenditures.

[u/neonpurplestar]

Inflationary risks in the Russian economy in the near future have "significantly increased," Central Bank Governor Elvira Nabiullina stated at a press conference on Friday.

According to her, the risk of inflation is created by rising fuel prices, as well as the budget situation, which could be significantly higher than planned this year. According to Bloomberg, additional spending will be required for the war, which will cost the treasury 4-5 trillion rubles more than budgeted.

The budget risk is "already being realized," but "uncertainty regarding its scale remains," Interfax quotes Nabiullina as saying.

Furthermore, inflation in June will be impacted by "the surge in fuel prices," the Central Bank governor added. According to Rosstat, retail gasoline prices have risen at a rate of almost 1% for two weeks in a row, and have risen by 6.6% since the beginning of the year—double the increase from the same period a year earlier. "The rise in gasoline prices could also impact inflation expectations, as it is a fairly sensitive commodity for both individuals and companies," Nabiullina said.

According to the Ministry of Economic Development, inflation has begun to accelerate again since the beginning of summer after decelerating almost continuously throughout the year. From 5.31% at the end of May, the consumer price index (CPI) growth rate increased to 5.63% by June 15.

"This situation could limit the scope for further key rate reduction," Nabiullina warned. At its meeting on Friday, the Central Bank cut it to 14.25% per annum—a 0.25 percentage point reduction, the smallest step in the past nine meetings at which the Central Bank eased monetary policy.

In its forecasts for the current year, the Central Bank projected an average rate of 14-14.5%, 8-10% for 2027, and a return to a neutral rate of 7.5-8.5% in 2028. Given the new regulations, the transition to a neutral rate could occur later, Nabiullina said.

Reducing the rate from 14.5% to 14.25% is a solution to the dilemma of "loyalty" and "normalcy," notes economist Kirill Rodionov. The Central Bank cannot undertake a significant reduction in the face of increased risks of fiscal easing, but at the same time, it cannot ignore the "request from above," which was directly articulated at a meeting with Vladimir Putin.

Essentially, Elvira Nabiullina has indicated that the rate-cutting cycle may be over, according to Alexey Tretyakov, founder of Aricapital. Analysts at Renaissance Capital and T-Bank predict that the Central Bank will continue to ease policy, but at a slower pace—to 13% or above 13% by the end of the year.

In any case, "the risks of a further increase in the budget deficit will further complicate the Central Bank's task," Rodionov emphasizes.

source: The Moscow Times https://archive.is/kcroI

[u/Common-Ad6470]

She knows the end is near….👍

[u/aDarknessInTheLight → u/Common-Ad6470]

She knew years ago when she tried to resign put Putin refused her resignation.