© Liza Ermolenko
|
At this point I would argue with analysts, because we think that it is actually likely that the Central bank will end up quite close to the 4% inflation target next year.
There are two main reasons why we believe it is possible. Firstly, after the recession in the Russian economy there does seem to be some spare capacity, which means that when the economy starts to recover, companies can use this spare capacity in order to meet strengthening demand, which, in turn, means that the underlying price pressures will remain quite weak.
The second reason is that the Central bank has been extremely hawkish as of late: they have made it quite clear that they are very keen on inflation expectations falling. Furthermore, the Bank's officials stated that in fact they will not continue the easing cycle until inflation expectations fall, which came as a surprise to most analysts. Besides, it does seem at the moment that the Central bank is very determined: the fact that they are not going to cut rates means that in real terms interest rates will remain quite high, which again will help bring the underlying price pressures down.
These two factors combined will most certainly mean that it is quite likely that the inflation target of 4% will be met at some point in 2017.
Last week, World Trade Organization held discussion on its first Trade Policy Review of the Russian Federation. At this point, the WTO is questioning whether the country is strong enough to continue participating in the Union. What is your take on the matter?
Russia has joined the World Trade Organization relatively recently and I think it is rather unlikely that they would expel a country from the Organization based on its economic performance.
What is your forecast for USD/RUB and EUR/RUB currency pairs till the end of 2016?
By the end of this year, we expect to see the Ruble at 66 against the US Dollar and 69.5 against the Euro.