Elvira Nabiullina: Review of recent inflation developments in Russia and economic outlook Statement by Ms Elvira Nabiullina, Governor of the Bank of Russia, in the follow-up to the Board of Directors meeting, Moscow, 18 September 2020. * * * Today, the Bank of Russia has decided to maintain the key rate at 4.25% per annum. Why have we made this decision, although we do see room to further ease monetary policy under the baseline scenario? Firstly, in recent months inflation has been slightly higher than expected. This trend has been driven by both a rapid revival of consumer demand after the lockdown period and the weakening of the ruble in July — August. We estimate that short-term proinflationary risks have slightly risen again, while disinflationary risks somewhat decreased. However, disinflationary risks still prevail in the medium run. Secondly, the external environment has become more volatile. There are rising concerns about the pace and sustainability of the recovery in the global economy, especially considering that in recent weeks the pandemic situation has worsened to a certain extent in a number of countries. Geopolitical risks have intensified. Moreover, we also considered the following factors when making our decisions. Inflation expectations remain elevated, affected by price and exchange rate movements and the persistent uncertainty over further developments. The companies we survey are reporting rises in costs due to higher input prices. Moreover, they incur extra costs since they need to comply with the sanitary and epidemiological requirements. Concurrently, businesses assess demand for their products as weak.
Evidence of a persistent ‘greenium’ in secondary market pricing is however more mixed. 14  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  14  Chart 10: Currency composition of bonds by UK  Chart 11: New issue premia for non-financial  domiciled issuers (excluding gilts)  European € bonds (Sep 2020)  Source: CBI, Bloomberg Finance L.P. and Bank calculations  Source: Bloomberg Finance L.P. and Bank calculations  Governments’ interest in issuing green bonds is also growing rapidly. The outstanding stock of sovereign green bonds (SGBs) currently stands at $ (Chart 12), and recent months have seen inaugural issues from a range of countries including Sweden (a use-of-proceeds bond), Luxembourg (the first European sovereign sustainability bond) and Germany (an innovative twin green and conventional issue designed to aid liquidity and comparability). Chart 12: sovereign green bonds in issue  Chart 13: Dutch green corporate bonds  Source: CBI and Bank calculations. Source: CBI, Bloomberg Finance L.P., Luxembourg Government, Swedish National Debt Office and Bank calculations. 15  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  15  The direct benefits to government finances are similar to those in the corporate sector, and include the ability to lock in commitments to undertake climate-improving investment, while reducing issuance costs and reaching a larger, more diverse investor base.