Price risks are created by the actions of consumers associated with high inflationary expectations, the head of the Central Bank Elvira Nabiullina said during the state of the State Duma, the Central Bank says.
Expectations really change the behavior of people, she explained. “People start to spend more opportunity to spend more, not to save: buy now, even if the consumer credit is growing), until it has risen even more. And such a change in the model can create serious risks of the spilation of the inflationary spiral. When the proposal It still does not sleep, because there are limitations of logistic and so on, so on, and cash demand is growing. It does not turn into an increase in consumption, prices are just growing, “Nabiullina said.
The only way to temper high inflationary expectations is to return inflation to the goal, the head of the Central Bank indicated. People should have a “sufficiently long experience of life” with slowly growing prices, the head of the regulator believes.
At the same time, Nabiullina emphasized that high inflation really destroys the well-being of citizens. It is necessary to take action to prevent further price increase. Therefore, I explained Nabiullina, the Bank of Russia at the last meeting and raised the rate to 7.5 percent.
The decision to increase the key bet to 7.5 percent of the Central Bank adopted at the meeting on October 22. The increase was sixth in a row from March, then the rate was at the lowest in the modern history of Russia – 4.25 percent per annum.