One-legged inflation targeting

Overview

Russia’s disinflation is now supported by a sound interest-rate framework. But this newly found anti-inflationary zeal has not resolved the familiar exchange-rate dilemma. The 9 per cent appreciation of the ruble in real effective terms during the period January-April 2010 highlights the scale of the political and economic challenge ahead – when Russia follows its peers into the tightening cycle. At stake here is a pre-requisite for sustainable...