YEREVAN, July 9, /ARKA/ “The rapid recovery of the global economy, fuelled by credit and budgetary injections in developed countries, is driving asset prices up massively,” said Even Vinokurov, chief economist at the Eurasian Development Bank (EDB).
“Temporary factors, such as pandemic-induced disruptions in production chains, the shrinking choice of suppliers and components, and the reduced supply of certain crops, also contribute to this situation. As a result, we are seeing a global spike in inflation. Almost forgotten in the 2010s, rising inflation rates have not only returned to the agenda of central banks globally, but have also become a difficult challenge for monetary policy,’ he said.
EDB analysts forecast the average inflation in the Bank’s member states to slow from 6.6% YoY in May to 5.6% by the end of 2021 due to an easing of demand-side inflationary pressures and the recovery of production chains. In Armenia, the EDB expects inflation of 5.4% at the end of the year; in Belarus, 8.7%; in Kazakhstan, 6.7%; in Kyrgyzstan, 7.7%; in Russia, 5%; and in Tajikistan, 7.4%.
In the face of heightened inflationary pressures, the EDB forecasts further cuts in monetary stimulus in most countries in the region.
The Bank’s analysts expect Russia’s key rate to rise to 6–6.5% to keep the economy from overheating. With the projected slowdown in inflation, the Bank expects a transition to neutral monetary conditions in most EDB member states over the medium term. -0-
