Russian inflation is slowing faster than expected, says CB governor

Russian inflation is slowing faster than the central bank expected, and there are signs of easing in the severity of labour market shortages, Governor Elvira Nabiullina said on Wednesday.

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The central bank forecasts inflation this year to be between 7 per cent and 8 per cent, but has recently indicated it is more likely to be at the lower boundary of that forecast - still well above its official target of 4 per cent.

Weekly inflation data for June showed that, on an annualised basis, inflation fell from 9.9 per cent in May to 9.4 per cent as of June 23.

The central bank expects inflation to be on target by 2026.

"Inflation is slowing faster than we expected," Nabiullina told a banking conference, stressing that the central bank must balance lowering inflation with avoiding excessive cooling of the economy.

Nabiullina said that if economic indicators pointed to a more significant slowdown than anticipated, the central bank would have room for bolder interest rate cuts. The bank cut rates by one percentage point to 20 per cent last month, but has come under heavy pressure from politicians, bankers and business leaders to ease monetary policy much more aggressively.

Nabiullina added that the rouble's recent strengthening has contributed to slowing inflation, but emphasised that the exchange rate should reflect the interests of all market participants.