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Fourthly, a key factor will be trends in imports, specifically how quickly the volume of imports will restore and how it will correlate with export quantities.
As you can see, external conditions involve a very large number of possible factors that might have diverse influence. We will assess all changes and the mutual effects of these processes.
Winding up, I would like to comment on monetary policy prospects in the conditions of unprecedented uncertainty.
We need to adjust our policy as follows. On the one hand, it should not hinder the structural transformation of the economy. On the other hand, we need to avoid stagflation risks. In the first case, we might face a problem if the level of the key rate is too high in a situation where demand contracts more considerably than supply. In the second case, a problem might arise if the key rate is too low when companies lack real opportunities to ramp up supply and if we reduce the key rate too quickly and thus the response to price dynamics observed today is excessive.
If the situation develops in line with the baseline forecast, we will gradually decrease the key rate further as steady inflation slows down. We will consider the necessity of a further key rate reduction at our upcoming meetings. The time and the size of the reduction will largely depend on the pace of a decrease in households’ and businesses’ inflation expectations, as well as on how companies will rearrange their production chains in the new conditions and how successfully they will address supply-side constraints.
According to the updated forecast and our today’s decision, the average key rate will equal 10.8–11.4% p.a. this year, 7–9% p.a. in 2023, and 6–7% p.a. in 2024.
2.12 Oil exports from Russia to the EU soar in first 100 days of war despite attempts to sanction the business
Russia’s revenue from energy exports in the first 100 days of the war amounted to €93bn, according to a study by CREA and the EU remains the largest buyer of Russian gas and oil, even after the sixth package of sanctions was put in place that target energy.
Despite the West’s push to phase out Russian energy imports and deprive the Kremlin of revenues to finance its war in Ukraine, the country’s export revenues were in fact up by almost 40% year on year in May, on the back of soaring global prices, data published by the Helsinki-based Centre for Research on Energy and Clean Energy (CREA) shows.
40 RUSSIA Country Report October 2020 www.intellinews.com