Bank of Russia’s chief names main disadvantages of high inflation for Russia
Elvira Nabiullina stressed that high inflation meant greater price volatility.
The main disadvantages of high inflation are the weakening of the ruble and the high cost of long-term loans for most borrowers, head of the Bank of Russia Elvira Nabiullina said at a press conference following a meeting of the Board of Directors of the Central Bank.
"Why is it so important to return to [inflation of] 4%, not put up with 6%, 8%? Firstly, to guarantee the protection of citizens' savings and income from depreciation. Secondly, only with low inflation will long-term loans be available. With high inflation, such loans, including mortgages, will be expensive for most borrowers, since the price of such loans includes an inflation component," she said.
Beside that the ruble is constantly weakening when inflation in the country is significantly higher than in trading partner countries, Nabiullina noted.
The head of the regulator added that high inflation also means greater price volatility.
"The higher the inflation, the more difficult it is to manage. If we agree to a price growth rate of 6-8%, then the risks of inflation will increase significantly moving into the double-digit region. Then it will be much more difficult and expensive for society to bring it back under control, so the Bank of Russia will do everything possible to reduce inflation to 4% next year," she concluded.
Source
The main disadvantages of high inflation are the weakening of the ruble and the high cost of long-term loans for most borrowers, head of the Bank of Russia Elvira Nabiullina said at a press conference following a meeting of the Board of Directors of the Central Bank.
"Why is it so important to return to [inflation of] 4%, not put up with 6%, 8%? Firstly, to guarantee the protection of citizens' savings and income from depreciation. Secondly, only with low inflation will long-term loans be available. With high inflation, such loans, including mortgages, will be expensive for most borrowers, since the price of such loans includes an inflation component," she said.
Beside that the ruble is constantly weakening when inflation in the country is significantly higher than in trading partner countries, Nabiullina noted.
The head of the regulator added that high inflation also means greater price volatility.
"The higher the inflation, the more difficult it is to manage. If we agree to a price growth rate of 6-8%, then the risks of inflation will increase significantly moving into the double-digit region. Then it will be much more difficult and expensive for society to bring it back under control, so the Bank of Russia will do everything possible to reduce inflation to 4% next year," she concluded.
Source