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Russia’s Central Bank raises inflation forecast from 8% to 10-11%

Russia’s Central Bank has officially increased its annual inflation forecast from 8% to 10-11%, the first deputy chairman said on Tuesday.

“Annual inflation will most likely reach double figures this year, totaling between 10% and 11%,” Alexei Ulyukayev told an international investment forum in Moscow. Ulyukayev also said the Central Bank would have to launch an inflation targeting policy in the short term rather than in the mid-term as previously planned. Due to the Russian banking sector’s current liquidity crunch, the Central Bank will switch from its exchange rate policy to a policy of interest rate regulation to give it more leverage over inflation, Ulyukayev said. The deputy chairman also said the accelerated inflation rate was due both to external and internal factors, including a sharp rise in world food and energy prices. Inflation in Russia stood at 9% in 2006. (