Russia should anchor monetary policy to tame inflation

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IANS/RIA Novosti | 27 Jan, 2012
Russia should orient its monetary policy more strongly toward fighting consumer price inflation, the International Monetary Fund (IMF) said Thursday.

"Russia's monetary policy needs to be anchored more firmly on inflation. This is because low and stable inflation is key to mobilising resources domestically, and channeling them to productive investment and other uses," said Odd Per Brekk, the IMF's senior resident representative in Russia.

Consumer price inflation in Russia hit a historic post-Soviet period low of 6.1 percent in 2011. The government's inflation forecast for 2012 stands at five-six percent.

"Our analysis suggests that a medium-term target range for inflation of three-five percent would be appropriate," he added.

Brekk said the IMF agreed with the Bank of Russia's intention to move to full-fledged formal inflation targeting, in the context of a flexible exchange rate, by 2014.

"It will be important to continue progress towards a more flexible ruble exchange rate, and at the same time strengthen the Bank of Russia's monetary policy toolkit," he said.