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Russia’s Monetary Policy in 2016

Author

Listed:
  • Bozhechkova Alexandra

    (Gaidar Institute for Economic Policy)

  • Trunin Pavel

    (Gaidar Institute for Economic Policy)

  • Knobel Alexander

    (Gaidar Institute for Economic Policy)

  • Kiyutsevskaya Anna

    (Gaidar Institute for Economic Policy)

Abstract

In 2016, the Bank of Russia implemented a conservative monetary policy aimed at mitigating inflation. Commercial banks decreased their demand for central bank refinancing as the Reserve Fund was spent, in which case the central bank had to employ a set of instruments to prevent an increase in the money supply. It happened twice over the course of the year – on June 14 and September 19 – that Russia’s central bank cut 0.5 percentage points off the key rate, to 10% p.a. With a declining inflation rate and inflation expectations available during the year, a rather moderate decline in the key rate suggested growth of the real interest rate in the money market. Maintaining a positive real rate in the money market helps prevent prices from hiking upwards as the savings appeal strengthened, although there is risk of economic slowdown.

Suggested Citation

  • Bozhechkova Alexandra & Trunin Pavel & Knobel Alexander & Kiyutsevskaya Anna, 2017. "Russia’s Monetary Policy in 2016," Published Papers ppaper-2017-269, Gaidar Institute for Economic Policy, revised 2017.
  • Handle: RePEc:gai:ppaper:ppaper-2017-269
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    More about this item

    Keywords

    Russian economy; monetary policy; money market; exchange rate; inflation; balance of payments;

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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