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  • Feb 2nd, 2005
  • Comments Off on Stronger rouble will curb inflation: finance minister
Russia could reach its 2005 inflation target by allowing the rouble to appreciate, Finance Minister Alexei Kudrin told Reuters on Tuesday, though an Economy Ministry official said it would be hard to achieve. "This year (inflation) will be 8.5 percent. We need to use additional instruments of monetary policy, including rouble appreciation," Kudrin said in an interview. His comments sent the rouble to its strongest level in a week.

The government insists it can cut price growth to 8.5 percent this year from 11.7 percent in 2004, but some analysts see 2005 inflation as high as 13 percent.

Andrei Klepach, the Economy Ministry's chief forecaster, said later on Tuesday that price rises in January had already put this year's target in jeopardy.

"The results for January make it extremely hard to achieve the goal of inflation at 8.5 percent. But for the time being, the government is not abandoning its target," Klepach said.

Kudrin said consumer price growth in January will be 2.5 percent month-on-month, above the 1.8 percent seen a year ago, while February inflation should slow to less than 1 percent after 1 percent a year earlier.

Kudrin's comments sent the rouble to its strongest in a week on the Moscow Interbank Currency Exchange (MICEX). It reached a high at 27.9501 to the dollar, having been fixed at 28.1136 on Monday.

"Kudrin's words were the main catalyst," a dealer said.

If the rouble firmed too quickly it could hamper growth, Kudrin said, adding the economy should be able to adapt.

Russia's booming economy is slowing. The statistics office sees growth last year down at 6.5 to 6.7 percent from 7.3 percent in 2003.

Copyright Reuters, 2005


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