In October, the Ministry of Economic Development expects a decrease in annual inflation below 4%. This statement was made by Minister Maxim Oreshkin on Wednesday, September 25, speaking at a government hour in the Federation Council. The head of the department stressed that the situation in the Russian economy "opens up space for action" in the field of monetary policy.

“From the point of view of macroeconomics, we have achieved deficit minimization within the framework of fiscal policy, which, combined with a fall in inflation below the target level of 4%, which we expect in October, opens up the space for monetary policy actions,” TASS quotes Maxim Oreshkin.

In a conversation with RT, Konstantin Korischenko, head of the Department of Stock Markets and Financial Engineering of the RANEPA, admitted that the minister’s hint is related to a situation where a decrease in inflation below the target is an indirect indication that monetary policy may be too tight and should be mitigated through a decrease key rate of the Central Bank.

“Inflation is influenced by such factors as the monetary volume of money, interest rate, household expenses, high import prices, regulated prices - they all work today to reduce inflation. This year there is a possibility of its decrease. But I would not have expected a rate below 6% per annum on the horizon of the coming year, ”Korishchenko said.

However, while the Ministry of Economic Development maintains its inflation forecast. So, by the end of this year, the agency expects the value of the indicator at the level of 3.8%, in 2020 - reduction to 3%, and in 2021-2024 - stops on the bar at 4%.

In turn, the top management of the Central Bank at a meeting in September lowered the rate to 7% per annum and announced that high inflation expectations were maintained.

“Inflationary expectations remain elevated. The growth rate of the Russian economy is still below expectations of the Bank of Russia. The risks of a significant slowdown in the global economy intensified. By the end of the year, the risks of acceleration and deceleration of inflation are balanced. Under these conditions, and taking into account the actual dynamics of inflation, the Bank of Russia lowered its forecast for annual inflation in 2019 from 4.2–4.7% to 4–4.5%. In the future, according to the forecast of the Bank of Russia, taking into account the current monetary policy, annual inflation will remain close to 4%, ”the Central Bank said in an official press release.

In part, experts attribute the decline in inflation to the seasonal factor.

“Now the season of fruit and vegetable production is in full swing, due to which we have reduced food inflation indicators, and they, in turn, affect national inflation. This situation is observed in Russia from year to year, ”Anna Bodrova, senior analyst at Alpari Information and Analytical Center, told RT.

In an interview with RT, the director of the LOCO-Invest analytical department, Kirill Tremasov, suggested that the Ministry of Economic Development “presses” the Central Bank and hints that the key rate should be reduced more aggressively.

“I think that the Central Bank can reduce the rate already at the October meeting. As always, it depends on the external background. If the external background is good, then I think that the Central Bank will reduce the rate in October by 25 basis points and do not exclude that it will reduce it in December. The base scenario in terms of the level of interest is still 6.75% at the end of the year, but it could be 6.5% per annum, ”Tremasov said.

The expert admitted that within a year or two in the Russian economy there will be a decrease in deposit rates, and the cost of loans will also decrease.

At the same time, it is curious that in his speech in the Senate Maxim Oreshkin raised the topic of weak economic growth, which was also mentioned earlier in the September report of the Central Bank.

According to the Minister, the country's forecasted GDP growth rate of 2% for 2020 is insufficient. Among the main tasks, the implementation of which is necessary for the growth of the economy, Oreshkin singled out the acceleration of investment activity, the increase in labor demand and the income level of the population.

In the Central Bank, the situation with the growth of the economy is explained by the weak dynamics of investment activity, including in terms of government spending on investments.

“Given the weak economic activity observed since the beginning of this year, the Bank of Russia lowered its forecast for GDP growth in 2019 from 1-1.5% to 0.8-1.3%. In 2020–2021, the growth rate of the Russian economy was also revised down taking into account the expected slowdown in global economic growth. Acceleration of economic growth to 2-3% by 2022 is possible as the government takes a set of measures to overcome structural constraints, including the implementation of national projects, ”the Central Bank said.