Excerpt from the release by the Bank of Russia:
In January 2013 the pace of inflation increased to 7.1 percent, which exceeded substantially the upper bound of the target range. The pace of inflation may stay above the target range during the first half of 2013, according to the Bank of Russia estimates. Taking into account the effect on economic agents’ expectations, the inflation rate staying above the target range for a prolonged period of time poses inflation risks.
The dynamics of the key macroeconomic indicators in December 2012 was in line with the previous trends. The growth rates of industrial production remained subdued and the growth of investment in production capacity continued to decelerate. At the same time, the level of industrial capacity utilization is relatively high, economic confidence indicators remain overall positive and labour market conditions together with credit expansion provide support to the domestic demand. Taking into account still relatively high bank lending growth rates, the risks of a significant economic slowdown stemming from the tighter monetary conditions are considered minor.
The Board of Directors of the Bank of Russia also decided to set a single required reserve ratio on all categories of credit institutions' liabilities at 4.25%. This required reserve ratio will be applied for reserve regulation starting from the reporting period from 1 March to 1 April 2013. This decision is neutral from the viewpoint of its influence on the banking sector and the current monetary policy stance. Taking into account the substantial increase of exchange rate flexibility as well as external and internal macroeconomic trends the necessity of using the required reserve ratios for the purpose of capital flows regulation decreased significantly.
In making monetary policy decisions the Bank of Russia will be guided by the inflation goals and economic growth prospects.