Russia’s central bank predicts the inflation rate may slide below 6 percent over the next year after policy makers conceded that the pace of price growth breached their target of 5 percent to 6 percent in 2012.
“There’s a good chance for a slowdown below 6 percent in the medium term on the horizon of six to 12 months,” Bank Rossii Chairman Sergei Ignatiev told lawmakers in Moscow today, adding the rate was at 6.5 percent as of Nov. 14. The central bank wants to cap inflation at 6.5 percent to 7 percent this year, according to Ignatiev.
Russia is the biggest emerging economy to increase interest rates this year, raising borrowing costs in September after droughts in U.S. and locally drove up food costs. Ignatiev said the move sought to curtail inflation expectations amid credit expansion of loans to companies and households.
“Ultimately money-supply dynamics have a determining influence on long-term inflation,” Ignatiev said. Russia’s M2, the broadest measure of money supply, grew 15.7 percent last month, down from 22.3 percent at the start of the year, according to Ignatiev.
Russia’s net capital outflow reached $61 billion in January through October, Ignatiev said. This month the central bank raised its forecast for outflows to reach $67 billion this year, from an earlier estimate for $65 billion.
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