Ulyukayev predicted decline of inflation below 10% in the first quarter of 2016

Moscow. December 16. Inflation in Russia by the end of 2015 to slightly exceed the official forecast and will be about 13%, but in the first quarter of 2016 it drops below 10%, which will allow the Central Bank to reduce the key rate to single-digit values, said the head of Ministry of economic development Alexei Ulyukayev told reporters on Wednesday in Nairobi.

“This year inflation will be closer to 13%. Inflation expectations are, indeed, slightly increased, this was primarily due to oil, exchange rate, and devaluation expectations. However, it changes the numbers but not change the trend: the rate of inflation falls slightly slower than predicted, but is declining and will decline. In the first quarter of possible single digit inflation”, – he said, commenting on the new forecast of the Ministry of inflation for 2015.

“I continue to believe that opportunities for lower (interest) rates exist. I think that a definite rate in the first quarter is quite possible”, – expressed his opinion the Minister.

He noted that the decision of the Central Bank a year ago to raise the key rate to 17% was justified. “With smaller shocks could be the situation, if you had to make a decision. The sooner you make the right decision, the less the shocks. Then it was perfectly correct, if we consider the complex: it’s not just a rate increase and a rate increase with the introduction of adequate mechanism of exchange REPO, which reduces the pressure, refusal to maintain a managed exchange rate and a simultaneous work with exporters on the topic of rhythmical sale of currency. The first three were mandatory. Only by December it was clear to us that this decision has to be taken”, he said about last year’s decision by the Central Bank.

Commenting on the issue of risks in the dollarization of the economy due to exchange rate fluctuations of rouble, the Minister said: “the Real risks of dollarization is not visible: the population and business have become much less sensitive to changes in the exchange rate from the point of view of changes in the structure of its foreign currency assets. Nothing alarming is happening there”.