Elvira Nabiullina: Guidelines for the Single State Monetary Policy in 2015 and for 2016 and 2017. Presentation by Ms Elvira Nabiullina, Governor of the Bank of Russia, at a meeting of the Committee on the Budget and Taxes of the State Duma of the Russian Federation, Moscow, 13 October 2014. *  *  *  Accompanying slides can be found on the Bank Russia’s website: Slides (PDF). Dear colleagues, good afternoon! Today we present for discussion the draft Guidelines for the Single State Monetary Policy in 2015 and for 2016 and 2017. This document was prepared in rather difficult conditions. The first factor is a slowdown in economic growth. The second is the volatility and tension in the foreign exchange and financial markets. And the third is a leap of inflation, which occurred recently. This all creates a rather complicated environment for developing the strategy of the guidelines for the monetary policy. We have prepared three scenarios. I suggest starting with the baseline scenario in slide 2. The baseline scenario is based on the assumptions of a steady recovery of the global economic growth, a slight decrease in oil prices, a gradual resolution of geopolitical problems and lifting during 2015 of most of the imposed mutual sanctions and restrictions. Nevertheless, in the first half of 2015, in our view, factors limiting investment activity will remain, and investment activity is one of the key elements that can affect the trends in economic growth.
The level of 4.0% will be reached by 2017. In addition to scenario II, scenario III assumes a more significant decline in oil prices, i.e. down to $ per barrel in 2017. The GDP growth rate in this scenario slows down to less than 1%. The scenario forecasts the use of the Reserve Fund within the framework of existing budget rules in order to stabilise the situation in the economy. As a result, the fiscal policy, in our opinion, will make a more pronounced positive contribution to the aggregate demand dynamics. In scenarios II and III the reduction of inflation to the medium-term target of 4.0% will require more time than in the baseline scenario; we believe it possible to reach this level in 2017. According to the forecast, the inflation will be 6–6.5% in 2015, 4.5–5.0% in 2016 and 4.0–4.5% in 2017. In both alternative scenarios, the Bank of Russia will focus on ensuring financial stability, preventing the reduction of confidence in the domestic financial system and national currency. To do this, we will be ready to use additional tools, including non-standard ones that have not been applied earlier. Currently, the Bank of Russia is also developing the so-called stress scenario – an emergency scenario, which implies a sharp and more significant drop in oil prices over the forecasted horizon. We consider the possibility of adding this scenario to the Guidelines at the next stage of the document finalisation.