MOSCOW, January 16 (RIA Novosti) – Easing monetary policy in Russia is counterproductive and will fail to boost economic growth, Central Bank First Deputy Chairman Alexei Ulyukayev said on Wednesday.
“We presume actual economic growth of 3.5 percent approximately corresponds to potential growth, and easing monetary policy by lowering interest rates would be counterproductive and would fail to stimulate economic growth, and would create imbalances and the accumulation of new risks in various segments of the economy,” Ulyukayev said at the Gaidar economic forum in Moscow.
The Central Bank kept its key refinancing rate at 8.25 percent at its interest rate policy meeting on Tuesday.
When asked if easing monetary policy could be used as a tool to solve long-term economic problems, Ulyukayev said it was necessary to understand whether the economy had a negative output gap when actual economic growth mismatched potential economic growth.
“We in the Bank of Russia presume there is no negative output gap and actual economic growth corresponds to potential growth and therefore monetary policy easing would be counterproductive,” he said.
The World Bank has maintained its forecast of Russia’s GDP growth for 2013 at 3.6 percent in a new report on global economic trends.
“Despite the projected high oil price, growth is expected to pick up only modestly to 3.8 percent by 2015 reflecting monetary tightening, a tight labor market, and capacity constraints,” the report said.