Monetary Policy and Inflation Rate: The Outcome of 2020

Alexandra V. Bozhechkova – Head of Monetary Policy Department of the Gaidar Institute; Senior Researcher of the Russian Presidential Academy of National Economy and Public Administration, Candidate of Economic Sciences (Moscow, Russia). E-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

Pavel V. Trunin – Head of Center for Macroeconomics and Finance of the Gaidar Institute; Director of Center for Central Banks Studies of the Russian Presidential Academy of National Economy and Public Administration, Doctor of Economic Sciences (Moscow, Russia). Е-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

Based on the results of 2020, amid crisis conditions the inflation rate sped up to 4.9%, an increase of 0.9 p.p. over the Russian Central Bank’s inflation target. In H1 2020, on the back of a large-scale reduction in consumer demand the inflation rate was below the target. In H2, proinflationary factors picked up. After gradual reduction in the key interest rate from 6.25% in January 2020 to 4.25% per annum in July 2020, the Central Bank of Russia suspended the easing of the monetary policy. In H1 2021, the inflation rate will keep speeding up, however, by our estimates, it will be close to the Bank of Russia inflation target by the year-end.

Key words: inflation, monetary policy, key rate, capital outflow, Bank of Russia.