Bloomberg News

Russian Liquidity Package May Spur Inflation, Ulyukayev Says

October 01, 2008

Parts of a Russian government-backed liquidity package aimed at helping the country weather the global financial crisis may spur inflation by as much as 2 percentage points, First Deputy Central Bank Chairman Alexei Ulyukayev said.

A decision to lower banks' reserve requirements by four points, which would free up about 300 billion rubles ($11.7 billion), was one measure that may push the annual inflation rate up by between 1 point and 2 points, Ulyukayev said in Moscow today.

Price stability is the government's ``long term'' goal, while financial stability is its priority in the short term, he said.

Consumer prices grew an annual 15 percent in August. Inflation is ``unacceptable'' and the government needs to push the rate below 10 percent next year, Prime Minister Vladimir Putinsaid on Aug. 21.

To contact the reporter on this story: Maria Levitov in Moscow at mlevitov@bloomberg.net Alex Nicholson in Moscow at anicholson6@bloomberg.net.

To contact the editor responsible for this story: Chris Kirkham at ckirkham@bloomberg.net


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