Page 70 - RusRPTAug19

in early 2020, the press release continues. "Taking into account the pursued monetary policy, annual inflation will return to 4% in early 2020," the Central Bank predicts.
"Annual consumer price growth rate declined to 4.7% in June (from 5.1% in May 2019) and was close to 4.6% according to the estimates as of July 22. June results show that annual core inflation declined for the first time since March 2018 and reached 4.6%," the regulator commented.
Poor economic activity along with temporary factors limits inflation risks over the short term horizon, the Bank of Russia notes.
The Bank of Russia will hold the next rate review meeting of the Board of Directors on September 6 of this year.
Falling inflation opened up space for a cut, but the CBR is worried that Ministry of Finance plans to start spending money being currently sterilized in the National Welfare Fund (NWF) once the size of the fund reaches 7% of GDP will stoke more inflation later this year.
In addition the CBR worries that government spending as it tries to catch up with the spending plans on the 12 national projects later this year will also stoke inflation.
As a result the CBR is expected to proceed cautiously with more growth- inducing rate cuts this year depending on how these two sources of government spending play out.
70 RUSSIA Country Report August 2019 www.intellinews.com