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Money stock composition and inflation risks

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  • Alexey Ponomarenko

    (Bank of Russia, Russian Federation)

Abstract

Revaluation of ruble value of foreign currency deposits and use of the Reserve Fund to finance budget deficit resulted in fast growth of broad money supply. The related inflation risks are currently moderate given that the money stock components with the fastest growth rates are not closely related to the aggregate demand. Nevertheless, inflation risks may increase in future if demand for liquid components of money supply grows and the composition of M2Y monetary aggregate returns to its 2011-2013 average values. We estimate that in this case the annual growth of household expenditures on final consumption may go up by 1.5 pp within two years, which may have negative inflation spillovers in 2017-2018.

Suggested Citation

  • Alexey Ponomarenko, 2016. "Money stock composition and inflation risks," Bank of Russia Working Paper Series note3, Bank of Russia.
    • Handle: RePEc:bkr:wpaper:note3
    as

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    References listed on IDEAS

    as
    1. Deryugina, Elena & Ponomarenko, Alexey, 2014. "A large Bayesian vector autoregression model for Russia," BOFIT Discussion Papers 22/2014, Bank of Finland Institute for Emerging Economies (BOFIT).
    2. Alexey Ponomarenko & Elena Vasilieva & Franziska Schobert, 2014. "Feedback to the ECB’s Monetary Analysis: The Bank of Russia’s Experience with Some Key Tools," Journal of Banking and Financial Economics, University of Warsaw, Faculty of Management, vol. 2(2), pages 116-150, November.
    3. Elena Deryugina & Alexey Ponomarenko, 2015. "Accounting for Post-Crisis Macroeconomic Developments in Russia: A Large Bayesian Vector Autoregression Model Approach," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 51(6), pages 1261-1275, November.
    Full references (including those not matched with items on IDEAS)

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