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Inflation slows down in line with the forecast

7 June 2019

Bank of Russia’s decisions on monetary policy in the second half of 2018 helped in balancing risks associated with inflation dynamics. As a result, inflation may slow down to 4% by 2020Q1. These are the findings by the authors of the new issue of Talking Trends, the BoR Research and Forecasting Department Bulletin.

In April inflation started a steady decrease, as this trend is expected to strengthen in the second half of the year. Along with that, prices among the most stable CPI components grow in line with 4% annual inflation. Major medium-term risks to inflation are primarily associated with geopolitical factors combined with the volatility on the financial markets, high growth in consumer lending, second-round effects related to inflation expectations, as well as the situation on the labor market.

The slowdown in economic growth in 2019Q1 had been temporary. As temporary negative factors gradually die out along with the expected revival in government spending, GDP growth will accelerate by the middle of the year.

Russian financial markets remained stable as the world economy faced growing risks. However, developments in advanced and emerging market economies and the risks of sanctions are still dominant in the Russian financial market.

The views and recommendations expressed in the bulletin do not necessarily reflect the official position of the Bank of Russia.