You may remember that inflation at the time was below target: about 2.3% at the start of the pandemic. As the economic situation evolved and a downturn in multiple sectors sent inflation down, we were able to lower the key rate as much as the economy needed. Incidentally, it was precisely the sustainably low inflation of pre-pandemic years that enabled the focus of monetary policy on support of growth and recovery. Imagine what would have happened if we had needed to deal with the dual problem of a pandemic and high inflation. In addition to temporary financial losses of consumers and businesses and shrinking economic growth, we would have had to counter inflation that would be eating up whatever money people still had. Our policy would have been far less successful. It would have been more difficult for the economy to recover, and a recovery would have taken longer. The monetary policy we had conducted in pre-pandemic years gave us room for manoeuvre and helped set the economy on a recovery path. This year, the economy has returned to the pre-pandemic growth trajectory. The immediate task is to stage a switch from recovery to sustainable growth. In order to do this, it is necessary to overcome the negative effects of the pandemic, and above all, to deal with soaring inflation. This is the focus of our current policy, and this is why we are raising the key rate. What happened? Why did price growth accelerate in Russia and across the globe?
On the contrary, monetary tightening works to constrain the growth of mortgage rates. They have risen far less than inflation. Unsecured consumer lending is rapidly expanding too. Banks often lure people with belowinflation rates — which may seem like an excellent offer. The borrower thinks: I take a loan for repairs and buy all the construction materials today, or else tomorrow they will be more expensive (indeed, prices have grown rapidly in this market) so I will end up overpaying less than if I bought the materials later. This is a typical situation. The same logic works with regard to other goods. And borrowers end up getting ripped off by a loan rate with an additional loan agreement attached, or through tied products forced on them. We are fighting this practice. Fines for misselling need to be raised. Banks should calculate the full cost of credit in such a way as to make all hidden fees visible to borrowers. It is an absolute priority for us protecting individuals’ rights in their interaction with financial providers. Now that inflation is above target, our action may even be tougher than before. It is important that we protect people from unnecessarily paying for openly pushed services they do not need and overspending on fees. I will spare you the details, but will say that we are developing regulatory measures to reduce consumer costs related to interaction with financial institutions. That would present an opportunity to improve people’s well-being, and we should use it.