Russia is to finish its transition to floating exchange rate and inflation targeting by early 2015. The Central Bank of Russia (CBR) plans to complete all the preparations and make sure this won’t impact ordinary people. Lately, the CBR unveiled its annual basic outline of monetary and financial policy for the 2014-2016 period. It reads that the regulator will let the ruble float in order to further increase the its “exchange rate flexibility” and finally move to the floating exchange rate by 2015. These measures aimed at helping the central bank to cope with the potential contradictions between the main goals described in the outline. Experts say that amid inflation targeting, the CBR’s monetary policy will influence the economy mainly by interest rates. The bank plans to keep sticking to this monetary policy instrument since interest rates are the key factor in the country’s economy. Eventually, it is interest rates that inflation levels hinge on. With the help of this policy, Russia’s central bank hopes to reach inflation target and make its further decisions resting on the comprehensive analysis of the current economic situation. The leading analysts say there is a chance to create such monetary conditions that will minimize existing risks and taper off the inflation rate in case Russia’s economy slows down considerably.
