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June 03, 2021 @ 12:16 +03:00
There are signs that Russia’s economy is overheating with annual inflation currently at 5.9%, Anton Siluanov, the country’s finance minister, said Thursday. “If we continue with increased spending, what will we get? Overheating. Elements of overheating are already visible — high inflation,” Siluanov said at the St. Petersburg International Economic Forum, according to a Reuters translation. Consumer price inflation accelerated again in May, rising from 5.5% in April. Earlier this week Russia’s Central Bank Governor Elvira Nabiullina told CNBC that “inflation is accelerating” and that, unlike elsewhere, inflation was not seen as a temporary issue as economies reopened and consumer demand increased.
“In our case, it’s different,” Nabiullina told CNBC’s Hadley Gamble earlier this week ahead of SPIEF. “We think that the inflation pressure in Russia is not transitory, not temporary. We see more persistent factors, monetary factors, that’s why we started to get a rate hike back to the neutral stance.” Investors will be looking to the next central bank meeting on June 11 to see what it does next, with speculation mounting that the bank could hike interest rates by as much as 50 basis points from a current level of 5%. The central bank’s inflation target is 4%.
Russia’s central bank now believes GDP growth for 2021 will be between 3-4% but Nabiullina said “a lot depends on the situation of course … this recovery is uneven.” The country’s central bank governor told CNBC that U.S. sanctions were a “persistent risk” to the country. However, she also said Moscow’s reserves were “quite big, to withstand all financial scenarios or geopolitical scenarios,” and are probably more diverse than other countries’ reserves.
Russia warns its economy is showing signs of overheating, CNBC, Jun 3