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In Search of an Effective Solution to Inflation Management

Inflation is a serious problem for the Russian economy. As a result of the study, the author comes to the conclusion that in the current circumstances, achieving low rates of price growth by setting and maintaining an extremely high key rate does not seem possible, since in addition to some impact on demand, it greatly restrains the possibility of increasing the supply of goods in the quality and volume required by corporate and retail buyers. The lack of such supply is the real cause of inflation. The article substantiates the need to bring the key rate to the level of real inflation. It is proposed to economically motivate commercial banks to tighten consumer lending and develop corporate lending through macroprudential regulation of their activities, setting higher requirements for consumer loans and more incentive terms for loans to those producers of capital and consumer goods that can compete with the corresponding imports in price/quality terms. As a result, individuals will be motivated to consume more consciously and financially justified, and that part of the Russian industry that is capable of producing competitive products and supplying them to the domestic market will receive powerful credit support, that is absolutely necessary to facilitate the structural restructuring of the economy. At the same time, it is not proposed to change the credit risk assessment system of commercial banks. Read more...