Rising inflation expectations in Russia reduce the likelihood of monetary policy easing

The increase in inflation expectations in September from August 13.7 percent to 14.2 percent reduces the likelihood of monetary policy easing (monetary policy), and it is associated with circumstances beyond the control of the Bank of Russia. Vedomosti writes about this.

Alfa Bank's chief economist Natalia Orlova pointed out that the deteriorating fuel situation in many regions of the country and the depreciation of the ruble from the level of the first half of the year makes citizens expect that both factors will be transferred to prices in stores in the foreseeable future.

The chief economist of T-Investments, Sofya Donets, adds geopolitical tension to these reasons, that is, negative expectations about stopping the fighting in Ukraine.

According to Orlova, the September data for the Central Bank looks pretty bad. If inflation expectations remain in the range of 13-15 percent, then in October the most logical thing would be to maintain the key rate at 14 percent. The expert also does not believe in easing in December.

Donets admits that there is still a whole month until the next meeting, by which time new data on inflation expectations and observed inflation will have time to come out. If there are no new negative surprises, then sentiment may improve, but the increase in housing and communal services tariffs, postponed from July to October, reduces the likelihood of such a development.