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The degree of monetary tightening for a sustainable disinflation depends not only on the inflation rate, but also on the conditions that have led to its rise. There are three reasons why considerable monetary tightness might need to be maintained even when inflation decelerates.
People’s inflation expectations are often based on the dynamics of prices for certain goods and services called “visible items”. For Russians, these visible items include durables such as cars and clothes, and also petrol, housing maintenance and public transport fares.
