Central Bank of Russia Says Inflation Will Likely Be a Long-Term Problem

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The governor of The Central Bank of Russia has cautioned that inflation would be a long-term problem in her nation, indicating that the bank will maintain its tight monetary policy.

In an interview with the Financial Times, Elvira Nabiullina stated that the central bank’s concerns stem from public anxiety about rising costs. Sharp increases in food costs, she claimed, have “de-anchored” ordinary Russians’ inflation expectations, with polls indicating that people expect an increase of more than double the central bank’s predicted yearly number.

Expectations of inflation run the danger of pushing people to stash up products in order to fight inflation, resulting in price increases. They also risk inflaming wage demands and prompting firms to raise prices ahead of schedule.

As of March, the central bank has raised interest rates four times, along with a full percentage point hike in July.

Russia is part of a tiny group of developing market counterparts, which includes Brazil too, that are adopting a stronger position on inflation than the Federal Reserve — which has dismissed the concern as a “transitory surge” brought on by the epidemic recovery — and several other nations that are keeping rates low.