Alexey Zabotkin: Plan of analytical work and events for the Bank of Russia’s Monetary Policy Review Speech by Mr Alexey Zabotkin, Deputy Governor of the Bank of Russia, on releasing a plan of analytical work and events for the Bank of Russia’s Monetary Policy Review, Moscow, 6 October 2021. * * * Good afternoon, As Bank of Russia Governor Elvira Nabiullina announced making a speech at the International Financial Congress at the end of June, the Bank of Russia plans to carry out a comprehensive analysis of the Bank of Russia’s monetary policy, its objectives and instruments — the Monetary Policy Review — over the period of inflation targeting in Russia. Today, we have launched a special web page covering the plan of analytical work and key events within this Review. I will provide a brief summary of this announcement and then answer additional questions. Why is this important and why are we doing this right now? First. The Bank of Russia switched to the inflation targeting regime in 2015. Annual inflation decreased to 4% in 2017. It has been seven years since we started to implement this policy and nearly five years since inflation reached the target. This is a sufficient period for us to be able to make conclusions about our achievements. The Review is intended to assess the effectiveness of the monetary policy implemented and take a look at past events.
If policy is given the narrower goal of protecting the banks from the cycle and it proves possible to set clear rules in place (for example a simple leverage ratio) there would be no need for a further policy maker to be involved. However if policy is given the broader macroeconomic goals of stabilising credit – protecting the cycle from banks if you will – and judgement is required on the state of the cycle and whether and when to vary the rules, then it would be essential for the Central Bank to play a leading role, albeit in close consultation with the regulator. In my view that is the more likely outcome. Conclusion One theme you may have noticed in these reflections is the need for policy makers to be willing to back their judgements – whether in identifying asset bubbles or identifying firms or markets which threaten financial stability – and to take pre-emptive action. For example, if most macro-models were not giving us warning signals in recent years, our analysis of the financial sector certainly was. As I mentioned earlier, successive Financial Stability Reports did set these dangers out in 2006 and 2007 and indeed earlier. One of the lessons we have acted on already is to make more of such warnings.