Russia's Monetary Policy in 2016

Russian Economy In 2016: Trends and Outlooks. 2017. Moscow, IEP, Issue 38, pp. 27-45

21 Pages Posted: 17 Jul 2017

See all articles by Alexandra Bozhechkova

Alexandra Bozhechkova

Gaidar Institute for Economic Policy; Russian Presidential Academy of National Economy and Public Administration (RANEPA) - Institute of Applied Economic Research

Alexander Knobel

Gaidar Institute for Economic Policy; Russian Presidential Academy and Public Administration (RANEPA) - Institute of Applied Economic Studies

Pavel Trunin

Gaidar Institute for Economic Policy

Anna Kiyutsevskaya

Center for Macroeconomic Research, Alfa Bank

Date Written: July 7, 2017

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.

Keywords: Russian economy, monetary policy, money market, exchange rate, inflation, balance of payments

JEL Classification: E31, E43, E44, E51, E52, E58

Suggested Citation

Bozhechkova, Alexandra and Knobel, Alexander and Trunin, Pavel and Kiyutsevskaya, Anna, Russia's Monetary Policy in 2016 (July 7, 2017). Russian Economy In 2016: Trends and Outlooks. 2017. Moscow, IEP, Issue 38, pp. 27-45. Available at SSRN: https://ssrn.com/abstract=2998505 or http://dx.doi.org/10.2139/ssrn.2998505

Alexandra Bozhechkova

Gaidar Institute for Economic Policy ( email )

Gazetny pereylok 3-5
Moscow, 125993
Russia

Russian Presidential Academy of National Economy and Public Administration (RANEPA) - Institute of Applied Economic Research ( email )

Russia

Alexander Knobel

Gaidar Institute for Economic Policy ( email )

3-5 Gazetny Lane
Moscow, 125009
Russia

Russian Presidential Academy and Public Administration (RANEPA) - Institute of Applied Economic Studies ( email )

Vernadsky Ave. 82
Moscow, 119571
Russia

Pavel Trunin (Contact Author)

Gaidar Institute for Economic Policy ( email )

Gazetny pereulok, 3-5
Moscow, 125993
Russia

Anna Kiyutsevskaya

Center for Macroeconomic Research, Alfa Bank ( email )

Moscow
Russia

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