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TARGETING INFLATION: GOALS AND CONTENT A.A. Khuramova, graduate student
Supervisor: A.B. Bass, candidate of economic sciences, associate professor Financial university under the Government of the Russian Federation (Russia, Moscow)
DOI: 10.24411/2411-0450-2019-10744
Abstract. The article discusses the main provisions of inflation targeting as the main method for implementing the monetary policy of the Bank of Russia. The features of the application of this method in Russia are briefly described. The advantages and disadvantages of inflation targeting are described. The influence of the increase in the value added tax (VAT) rate on inflation dynamics in the Russian Federation is considered. It is concluded that non-monetary factors of inflation, which are very significant in the Russian economy, remain outside the purview of the CBR, and the inflation expectations of economic entities are much higher than the target, and sofar the CBR cannot fix it.
Keywords: inflation targeting, Bank of Russia, monetary policy, monetary objectives, key rate, inflation expectations, VAT rate, price stability, money demand function.
The inflation targeting is the setting of a target for the growth rate of the general price level and the regulator's responsibility for achieving this goal in the medium-term time horizon. [1].
Due to high inflation, the prices of goods and services are rising, the savings of the economic subjects of the country are depreciating, there is an outflow of capital abroad, and the investment attractiveness of the economy is decreasing. All this leads to a slowdown in economic growth in the country, increases macroeconomic uncertainty.
One solution to this problem is inflation targeting. Inflation targeting is a monetary policy regime in which the main task of the Central Bank is to maintain stable low prices in the economy.
The process of inflation targeting can be divided into 4 stages [2]:
1. At the first stage, it is necessary to establish a certain planned indicator of the level of inflation for the selected year or other period of time, for which achievement the Central Bank is responsible.
2. At the second stage, the selection of monetary tools suitable for controlling inflation, which is also being developed at the level of the Central Bank of the country, takes place.
3. At the third stage, this monetary toolkit is applied depending on the current need and economic condition of the country.
4. At the fourth stage, the inflation rate at the end of the year or another reporting period is compared with the previously planned indicator or range of the indicator and analyzes the effectiveness of the conducted monetary policy of the Central Bank of the country.
Not every country can apply the inflation targeting policy, since it is necessary to implement a number of conditions. So, the main conditions for the introduction of the inflation targeting regime include: [3]
• independence of the monetary policy of the Central Bank, which should be legally enforced. This is the independence of the choice of tools of this policy, regardless of the fiscal policy of the government;
• the absence in the monetary policy of other monetary goals, as well as target indicators for the achievement of other indicators (for example, targeting the exchange rate);
The main disadvantages of the inflation targeting regime include: [3]
• in countries where non-monetary factors of inflation prevail, the targeting mode may be ineffective due to the need to reform the economy by other areas of power;
• the presence of a number of conditions that were listed above for the introduction of inflation targeting. For some countries, this
means a certain period of economic reform and preparation for the introduction of this regime, which is difficult to achieve in the short term;
• many countries continue to regulate the exchange rate when introducing an inflation targeting mode, that is, again, the necessary conditions are not met and contradictions arise [4].
Considering the practice of applying inflation targeting in the Russian Federation, it is worth noting that the Central Bank of the Russian Federation switched to this policy in 2014. So, based on the published data of the Central Bank of Russia, the following conclusions can be made: [5]
1) the main purpose of the inflation targeting mode is to protect and ensure the stability of the ruble by maintaining price stability, that is, sustainably low inflation.
2) Price stability contributes to the reduction of economic uncertainty and contributes to the formation of sources of financing long-term investments, which creates conditions for sustainable and balanced economic growth.
Within the framework of the inflation targeting policy, the Bank of Russia sets a quantitative inflation target, which is published in the Main Directions of the Unified State Monetary Policy. Taking into account the peculiarities of the Russian economy, the target is set, which should be 4%.
Changes in interest rates of the Bank of Russia affect the formation of short-term interest rates in the money market, the change in which, in turn, is transmitted to the dynamics of more long-term interest rates in the economy and a wide range of other financial variables, including exchange rates. Changes in monetary and financial indicators affect the decision-making of households and enterprises regarding consumption, savings, and investment. Thus, a change in the key rate of monetary policy affects the dynamics of prices and economic activity.
Thus, according to the information on the website of the Bank of Russia, inflation targeting is published in the Monetary Policy
Report and in the Guidelines for a Unified State Monetary Policy.
In 2019, inflation is expected at 5.5%. Significant impact on inflation and inflation expectations on the forecast horizon will have an increase in the basic VAT rate from January 1, 2019 by 2 percentage points. The scale of the change in inflation, however, will be less than n tax increase. When determining it, the Bank of Russia takes into account, among other things, the share of VAT in the structure of the retail price; the number of goods and services in the consumer basket, taxed at preferential VAT rates that will not be raised, and other factors.
At the same time, the final scale of the impact of the VAT increase on inflation will depend on the scale of secondary effects of this event: on how pronounced and sustained the increase in inflation expectations will be, and to what extent producers and trade organizations will be ready to accept part of the tax increase on their costs without transferring them completely to prices. " Thus, the impact of VAT will be short-lived and inflation will again recover within the target of 4% in 2020 and 2021.
Thus, it can be concluded that inflation targeting is applied in Russia, which is the main objective of the monetary policy of the Central Bank. Thus, based on the measures taken, inflation in the country in 2017, according to Rosstat, reached its historic minimum of 2.5%. First of all, this was due to the change and maneuvering of the key rate of the Central Bank of the Russian Federation. However, some experts believe that inflation targeting restrains the country's economic growth, and also that inflation targeting does not exist in Russia in its pure form, since the Bank of Russia is responsible only for monetary factors of inflation. Non-monetary factors of inflation that are very significant in the Russian economy remain outside the purview of the CBR. Also, the inflation expectations of economic entities are much higher than the target, and so far the Central Bank of the Russian Federation cannot fix this.
References
1. The main directions of the single monetary policy for 2019 and for the period 2020 and 2021.
2. The website of the Central Bank of the Russian Federation -http://www.cbr.ru/dkp/about_monetary_policy/main_objective_and_principles/.
3. The inflation targeting. [Electronic resource] URL: https://yango.pro/blog/inflyatsionnoe-targetirovanie/.
4. The inflation targeting. Treat difficult complicated. http://stolypinsky.club/2017/05/22/inflyatsionnoe-targetirovanie-lechi-slozhnoe-slozhnym/.
5. The policy of inflation targeting in Russia - http://izron.ru/articles/tendentsii-razvitiya-ekonomiki-i-menedzhmenta-sbornik-nauchnykh-trudov-po-itogam-mezhdunarodnoy-nauch/sekttsya-1-ekonomicheskaya-teoriya- spetsialnost-08-00-01 / politika-targetirovaniya-inflyatsii-v-rossii /.
ТАРГЕТИРОВАНИЕ ИНФЛЯЦИИ: ЦЕЛИ И СОДЕРЖАНИЕ А.А. Хурамова, студент
Научный руководитель: А.Б. Басс, канд. экон. наук, доцент Финансовый университет при Правительстве Российской Федерации (Россия, г. Москва)
Аннотация. В статье рассматриваются основные положения таргетирования инфляции как основного метода реализации денежно- кредитной политики Банка России. Кратко охарактеризованы особенности применения этого метода в России. Охарактеризованы преимущества и недостатки таргетирования инфляции. Рассмотрено влияние повышение ставки НДС на динамику инфляции в Российской Федерации. Сделан вывод, что немонетарные факторы инфляции, весьма значимые в российской экономике, остаются вне компетенции ЦБ РФ, а инфляционные ожидания экономических субъектов намного выше таргета, и пока ЦБ РФ не удается это исправить.
Ключевые слова: таргетирование инфляции, Банк России, денежно-кредитная политика, монетарные цели, ключевая ставка, инфляционные ожидания, ставка НДС, ценовая стабильность, функция спроса на деньги.
