That is explained by a late adjustment in the key rate relative to the growth of inflation expectations. Clearly, this is not a path we want to follow. We currently expect that our monetary policy stance will ensure that inflation returns to 4– 4.5% in the second half of next year. We recently outlined our approaches to monetary policy for the next three years and our outlook, as well as our scenarios in the draft Monetary Policy Guidelines. The second problem for us to address and keep in check is the consumer debt burden. This has always been a top priority issue for both the Federation Council and the Bank of Russia. It is on the agenda each time we meet at the Federation Council, and I am grateful to you senators that the issue never escapes your attention. Considering the need for many changes to legislation, improvements in this area would be impossible without your strong support. Our aim is to ensure that credit enables people to solve their problems but does not drive them into a debt hole. We have introduced a borrower’s debt burden indicator to discourage banks from issuing loans to borrowers who would find it difficult to service new debt — those who already have difficulty servicing existing debt. The Bank of Russia has enacted so-called macroprudential add-ons to make it less profitable for banks to issue new consumer loans and check excessively fast growth in consumer lending. In microfinance, caps have been introduced on interest and fines on loans.
Unfortunately, all that does not mean that the problems caused by the pandemic are behind us. For example, we can see a strong rise in inflation, both domestically and across the globe: demand has recovered as restrictions and lockdowns have been lifted, while supply-side restrictions persist. Companies in many sectors are recording skills shortages, and there are raw material and component supply disruptions. We are monitoring economic developments and the financial situation in the regions on an ongoing basis. At each policy Board meeting, our regional executives report on how the situation in the regions is unfolding and provide us with a broad picture. We note a global rise in prices for many goods (metals, wood, and food), which are pushing up business costs. Prices are increasing in many countries, but regulators view the current surge in inflation as temporary, and are just waiting for the trend to end. There is no way we can afford the same approach. Let me explain why. By historical standards, we are quite new to inflation targeting, the regime we switched to just six years ago. Regrettably, inflation expectations — a very valuable indicator — remain unanchored. What does this mean? Many countries record a temporary surge in inflation, but people and businesses are confident that their central bank will take whatever action necessary, and inflation will return to target. Those central banks have extensive experience in the field of inflation targeting. Therefore, with inflation expectations in their countries steady, they expect inflation to drop again after that surge.