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Deputy Director of the Research and Forecasting Department of the Bank of Russia
Countries that do not target inflation responded to the post-COVID inflation surge in a similar way to those with inflation targeting (IT), that is by raising policy rates. This crisis-driven convergence is the ultimate test of the IT regime’s efficiency under various conditions.
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.
Unlike in other countries, inflation expectations in Russia are unresponsive to low inflation data of previous years, an experiment has found. This makes it imperative to ensure sustainably low inflation and prove that price stability is achievable.
