Russian Central Bank May Raise Inflation and GDP Forecast for 2021

The Bank of Russia is expected to increase its inflation and GDP forecasts for 2021 at a crucial meeting in October, according to Kirill Tremasov, director of the Central Bank’s monetary policy department, in an interview with Izvestia daily, Kommersant reports. In July, the agency predicted 5.7-6.2 percent growth.

“The July GDP estimate for this year is 4–4.5 percent growth. Current data indicate that the economy is heading closer to the top limit of our projection, and if there is an adjustment in October, it will almost certainly be higher. The same is true for inflation. The estimate for July was 5.7-6.2 percent. According to the most recent data, we see that we are going considerably over the top boundary, therefore an upward adjustment of the inflation estimate is very likely,” said Mr. Tremasov.

Elvira Nabiullina, the president of the Central Bank, stated in mid-September that Russia had reached the top of annual inflation, which was approaching 7% at the time. She anticipates that inflation will return to 4% in the second half of 2022.

At the same time, for the first time since February 2021, inflation “seen” by the public fell by 0.9 percentage points (pp) in September (median estimate – 15.6 percent ).

According to the same estimates, inflation expectations for the next 12 months did not increase (a reduction of 0.2 percentage points against August indications), and the decline was less significant in the group with savings (minus 0.1 percentage point) than in the group without saves (minus 0.6 pp).