Russia Central Bank failed to implement its own inflation target

Officials of the disbanded government advised the Bank of Russia to reduce inflation targeting due to slow price increases, Forbes reports citing Bloomberg.

The main goal of the Central Bank is to achieve inflation of about 4%. This benchmark was established in 2016. The regulator planned to complete the task by 2017. But in July, against the falling prices for fruits and vegetables, inflation dropped to 3.9%. At the end of 2017, inflation was 2.5%, which renewed the historical minimum in Russia. In 2018, the rise in price exceeded 4.3%, in 2019 — 3%. Over the past year, the Central Bank has reduced the refinancing rate for five times, but has not yet set the target at 4%.

In mid-January, Andrei Kudrin, head of the Accounts Chamber, announced that the regulator is forced to change the inflation plan. He explained that the process will take some time as there is an accurate analysis needed. At the same time, Ksenia Yudaeva, deputy chairman of the Central Bank, said that the regulator’s management doesn’t plan to revise the target.

Analysts at Bloomberg supported the Central Bank, saying that the target at 4% was set not so long ago and it is too early to revise it. Some of them nevertheless noted that if the Central Bank fails to implement its own plan, it will be a fiasco for Russia’s monetary policy.