According to forecasts by Matrix Capital, the rate of inflation in October can leave behind the target level of the Central Bank, exceeding 5%. According to the updated forecast, the IMF predicts the year-end inflation in Russia at 2.8%, however, by the end of 2019 figure could rise to 5.1%.
The main trigger to the deterioration of the situation on the market, increasing inflation expectations, the Russians and the rate of inflation was the reform of the VAT increase from 18% to 20%, said Teplukhin.
“This “exercise” put into question the results of many years of work of the Central Bank to improve the financial stability of the economy. The effect on the budget from the VAT increase, of course, but it is not comparable with the negative effect,” he says.
In today’s situation need to increase VAT is not, as the budget lacks of revenues, moreover, the Federal budget for the next three years is planned with a large surplus due to increased oil prices.
By assumption, Pavel Teplukhin, the government considered raising the VAT as an alternative to raising the retirement age, in case the reform will not find approval. But in the end both reforms were approved, and the Russians were afraid of rising prices, thus provoking a rise in the rate of inflation.
However, further increase in the key rate of the regulator is waiting for not all. According to the Director of analytical Department of company “Loko-invest” Cyril Tremasova that took place while tightening enough in the coming months, it is not necessary to wait for a new rate hike.
“According to my predictions, until the fourth quarter of next year, the Central Bank rate will not increase. And by the end of the year, the regulator may renew the cycle of decline rates,” Tremasov considers.
According to the economist, much will depend on the situation on the financial markets and the ruble exchange rate, which is the major factor of growth of inflationary expectations. “It will intensify or weaken, is difficult to predict. But this will largely depend on whether you will need Central Bank to raise rates,” — he concluded.
Not waiting for a rise in the key rate before the end of the year and chief economist at Alfa Bank Natalia Orlova. The situation on the currency market has stabilized and does not pose a risk of acceleration of inflation, she said. A possible weakening of demand next year because of the increase in VAT and pension reforms should not be regarded as proinflationary factor, I’m sure Orlov.
“I have a basic insecurity that the scale of the inflationary concern, which is growing in the last months, acquitted. It may be that inflation actually accelerates, but will not cross the limit of 5%. Then, the Central Bank has no reason to raise rates,” — concludes the economist.