Medvedev stresses importance of ensuring low inflation

Inflation worries most Russians and stable prices are essential to the country's stable macroeconomic policy, Prime Minister Dmitry Medvedev said.

Inflation worries most Russians and stable prices are essential to the country's stable macroeconomic policy, Prime Minister Dmitry Medvedev said.

"Both the government and the Central Bank proceed from the assumption that price stability lies at the foundation of macroeconomic stability. People's confidence in the financial system and their long-term plans, how to save money, whether to take out a loan, depends in large part on this," Medvedev said at a government meeting.

He said that inflation is the problem that, according to statistics, genuinely worries most people. "This year, as I've already said, it could amount to more than 7%, which is higher than planned," Medvedev said.

Political and economic circumstances this year have changed considerably, and the outflow of capital has increased, he said.

"In this context, it's very important to ensure low inflation, the lowest possible in our conditions, through the instruments of monetary policy," Medvedev said.

He said this means preserving the purchasing power of the ruble, and the level of wages and pensions. "The economy, in this case, receives internal sources for long-term investment and can raise loans on acceptable terms, which is important for the development of the economy as a whole," Medvedev said.

He said the Central Bank is proposing to complete the transition to inflation targeting, and set the medium-term target for growth of consumer prices at 4% annually to 2016.

"There are different approaches here: some share this optimism, some don't. But nonetheless this is the position of the Central Bank. In this way we send a signal to citizens and businesses, investors and our trade partners, count on their confidence in our macroeconomic policy, that the policy being pursued will promote the stable position of the ruble as a savings currency," Medvedev said.

In addition, these measures will promote stable foreign trade settlements and make lending to businesses in the real sector more accessible, the prime minister believes.

"Naturally, this puts serious obligations on the Bank of Russia itself according to the law and on the government's finance and economics team in general," Medvedev said.

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