Central Banks

Russian central bank sees inflation a bigger risk than Donald Trump, Brexit

Here's where the Russia economy is headed
VIDEO1:0001:00
Here's where the Russia economy is headed

Inflation is a bigger concern for the Russian economy than U.S. president-elect Donald Trump, according to the nation's central bank.

"Brexit and Donald Trump's U.S. election victory were unexpected but nonetheless, the Russian economy and financial markets were not significantly affected," Ksenia Yudaeva, first deputy governor at the Bank of Russia, told CNBC's 'Squawk Box' on Monday.

Speaking on the sidelines of the Asian Financial Forum in Hong Kong, Yudaeva noted that Russia's macroeconomic policy, as reflected by the government budget and central bank decisions, has been stable and strong in the aftermath of both disruptive events, compared to other emerging markets.

She flagged inflation as the biggest risk to economic growth, rather than the prospect of increased sanctions.

Last month, the European Union (EU) decided to extend sanctions against Russia until mid-year while the U.S. has announced fresh punitive measures, including blacklisting five senior officials, in retaliation for Moscow's role in cyber-attacks during the U.S. presidential election.


A pedestrian walks along a bridge in central Moscow, Russia, January 25, 2016.
Maxim Shemetov | Reuters

But it remains to be seen if Trump, who is looking to improve ties with Russian President Vladimir Putin, will reverse the move when he enters office on Jan. 20.

"Our major concern for the next year is the inflation target of 4 percent; we expect to reach that at the end of the year," Yudaeva said.

Annual price growth fell to 5.6 percent in November from 6.1 percent in October, according to official data.

"Price growth has slowed down noticeably in all key groups of goods and services and monthly seasonally adjusted inflation indicators have declined as well... At the same time, a more confident drop in non-food price growth is necessary for sustainable inflation decline," the central bank said in a statement last month.

The central bank left its key interest rates steady at 10 percent at a scheduled meeting last month and its next review is set to take place on Feb. 3

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