Money stock composition and inflation risks

Alexey Ponomarenko

No note3, Bank of Russia Working Paper Series from Bank of Russia

Abstract: Revaluation of ruble value of foreign currency deposits and use of the Reserve Fund to finance budget deficit resulted in fast growth of broad money supply. The related inflation risks are currently moderate given that the money stock components with the fastest growth rates are not closely related to the aggregate demand. Nevertheless, inflation risks may increase in future if demand for liquid components of money supply grows and the composition of M2Y monetary aggregate returns to its 2011-2013 average values. We estimate that in this case the annual growth of household expenditures on final consumption may go up by 1.5 pp within two years, which may have negative inflation spillovers in 2017-2018.

Pages: 5 pages
Date: 2016-05
New Economics Papers: this item is included in nep-mac
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