Abstract

Inflation in Russia has reached its lowest historical level in 2017, but the economy is still growing slowly. International experience shows that low inflation does not always result in economic upturn, it should be supported by a more encouraging monetary policy. In Russia however monetary policy is still strict. High interest rates and free float regime of the ruble set in 2014 led to significant growth of CPI (in the first place) in 2014–2017, decrease of real disposable income of households, decrease of domestic demand, hampered investment and slowed economic growth. But this time Russian economy seems to have ample resources and potential to stimulate economic growth (i. e. surplus of liquidity according to recent estimates reaches 3 trillion rubles or 3% GDP, which needs to be channeled to economy thus making transmission mechanisms important). The reduction of key interest rates in 2015 and later despite the expectations had not caused the growth of inflation. However, Russian economy has capacity to absorb significant amount of money without the growth of prices. Since 2000, the growth of money supply significantly outpaced the prices’ rise. Such potential was created in the Russian economy in 1990s, when monetization level (M2/GDP) has fallen to the level below 15%. It’s highly important for business to make the ruble more predictable and stable. In Russia, it is crucial to take advantage of potential of low prices to secure a sustainable economic growth. However the latest measures such as VAT growth though expanding the income of budget at the same time may lead to price-rise and interest rate increase thus hampering the economic growth. Which makes concerted policy approaches in all economic spheres – economic, monetary, budgetary – even more important.

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